T 
Is57 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 


i^yVa^^ 


\f^  /./ 


/ ./  /J 


Of  elementary  treatises  on  all  the  principal  subjects  of  the  law.     The 
special  features  of  these  books  are  as  follows: 

1.  A  snccinct  statement  of  leading  principles  im  blacklet- 

ter  type. 

2.  A    isiore    extended    commentary,    elucidating    the    princi- 

ples. 

3.  Notes   and  authorities. 

Published  in  regular  octavo  form,  and  sold  at  the  uniform  price  of 

$3.75    per   volume,    including   delivery. 

Bound  In  American  Law  Buckram. 


1.  Norton  on  Bills  and  Notes.     (3d  Ed.) 

2.  C'InrU  on  Crimin;il   I.aw.     (I'd  Ed.j 

.';.  Sliiinuau  on  Conuiion-Law  Pleading.     (2d  Ed.) 

4.  Clark  on  Contracts.     (2d  Ed.) 

5.  F.Iack  on  Constitutional  Law.     (3d  Ed.) 

6.  Fetter  on  Equity. 

7.  Clark  on  Criminal  Procedur& 

8.  Tiflany  on  Sales.     (2d  Kd.) 

9.  Glenn  on  International  Law. 

10.  Jaggard  on  Torts.     (2  vols.) 

11.  P.lack  on  Interpretation  of  Laws.     (2d   Ed.) 

12.  Hale  on  Bailniuiits  and  Carriers. 

13.  Smith  on  Elenienfary  Law. 

14.  Hale  on  Damages.    '(2d  Ed.) 

15.  Hopkins  on  Real  Property. 

16.  Hale  on  Torts. 

17.  Tiffany  on  Persons  and  Domestic  Relations.     (2(1  Ed.) 

18.  Croswell  on  Executors  and  Administrators. 

19.  Clark  on  Corporations.     (2d  Ed.) 

20.  George  on  Partnership. 

21.  Shipman  on  Equitv  Pleading. 

22.  IMcKelvey  on  Evidence.     (2d  Ed.) 

23.  Barrows  on  Negligence. 

24.  Hughes  on  Admiralty. 

25.  Eaton  on  Equitj'. 

26.  Tiffany  on  Principal  and  Agent. 

27.  Gardner  on  Wills. 

28.  Vance  on  Insurance. 

29.  Tngersoll  on  Public  Corporations. 

30.  Hughes  on  Federal  .Tnrisdictinn  and  Procedure. 

31.  Chi  Ids  on  Suretyship  and  Guaranty. 

32.  Costigan  on  American  Mining  Law. 

33.  Wilson  on  International  Law. 

34.  Gilmore  on  Partnership. 

35.  Black  on  Judicial  Precedents. 

36.  Tiffany  on  Banks  and  Banking. 

In  preparation:     Handbooks  of  the  law  on  other  subjects  to  be  an- 
nounced later. 

Published    and   for    sale    by 

W^EST  PUBLISHING  CO.,  ST.  PAUL,  MINN. 

C5855J  ~ 


HANDBOOK 


OF    THE 


LAW    OF    PARTNERSHIP 


By   WILLIAM    GEORGE 

OF    THE    ST.    PAUL    BAR 


ST.  PAUL,  MINN. 

WEST  PUBLISHING  CO. 

1897 


>BV^567 


CorYRlGHT.    IbUT, 
BT 

WEST  PUHI.ISHIXG  CO. 


T 
ir97 


PREFACE. 


In  \a.ymg  the  following  pages  before  the  profession  the  author  ia 
mindful  that  a  distinguished  predecessor  of  his  in  this  line  of  inquiry 
has  disparaged  in  advance  the  efforts  of  any  one  who  may  attempt 
to  reduce  the  law  of  partnership  to  a  system  of  rules.  It  is  with 
very  gi-eat  diffidence,  therefore,  that  the  present  work  on  partner- 
ship law  is  submitted,  for  its  most  conspicuous  feature  is  an  attempt 
to  work  out  the  analysis  of  the  subject  into  a  complete  and  consecu- 
tive series  of  general  propositions.  No  one  can  doubt  the  value  of 
such  an  analysis,  but  the  reader  must  judge  for  himself  what  meas- 
ure of  success  has  crowned  the  author's  efforts. 

The  aspect  of  the  partnership  relation  nas  undergone  many  chang- 
es during  the  century  now  closing.  These  changes  have  been  traced 
and  explained  in  the  text,  while,  in  the  notes,  the  reader  has  been 
referred  to  the  leading  cases  and  the  best  text  writers,  so  that  he 
may,  by  following  the  changing  methods  of  interpretation  as  they 
appear  in  the  authorities,  learn  not  only  what  the  law  of  partnership 
now  is,  but  how  it  came  to  have  its  present  status.  There  has  been 
no  attempt  to  make  the  citation  of  cases  exhaustive  upon  well-estab- 
lished propositions,  but  it  is  by  no  means  meager,  nearly  five  thou- 
sand ca.ses  being  referred  to  in  different  parts  of  the  work.  Great 
pains  has  been  taken  in  the  citation  of  these  cases  to  have  them  each 
exactly  support  the  proposition  to  which  it  is  cited.  Long  lists  of 
cases  have  been  avoided,  and,  as  far  as  possible  in  a  one-volume  work 
on  so  extensive  a  subject,  the  cases  have  been  classified  in  the  notes 
and  the  specific  points  decided  have  been  stated.  It  is  believed 
that  all  the  leading  American  and  English  cases  are  included.  In 
citing  statutes  throughout  the  book,  the  last  general  revision  in  the 
several  states  has  in  each  case  been  consulted. 

In  gathering  material  for  the  text,  more  or  less  aid  has  been  re- 
ceived from  the  pages  of  Story,  Collyer,  Parsons,  and  others,  while 
GEO.  PART.  (iii) 


Jy  PREFACE. 

very  copious  use  has  been  made  of  the  great  work  of  Lord  Lindley, 
the  natural  resort  for  aJl  investigators  into  this  branch  of  the  law. 
Aclmowledgment  must  also  be  made  to  Mr.  William  B.  Hale  of  St 
Paul,  who,  by  his  labor  and  activity  in  assisting  in  the  preparation 
of  the  work,  has  eai-ned,  even  if  he  does  not  receive,  whatsoever 
credit  the  book  may  reflect  upon  its  author.  VV.  Q. 

St.  Paul,  Minn.,  Feb.  6,  1897. 


TABLE   OF   CONTENTS. 


CHAPTER  L 

DEFINITION  AND  ESTABLISHMENT  OF  RELATION. 

B«etlon  Png« 

1.     Partnership  Defined    2-  9 

2-5.     Establishment  of  Eolation 9-10 

4.  Competency  of  I'arties 10-16 

5.  Consideration    17-20 

6.  Formalities    20-22 

7-8.           Subject-Matter    23-29 

9.  Intention  to  be  Partners— What  Constitutes  a  Partnership.  .  30-34 

10.  Development  of  Modern  Doctrine 34 

11.  Grace  v.   Smith 34-35 

12.  Waugh  v.  Carver 35-37 

13.  Coi  v.  Hickman 37-52 

14.  Tests  of  Intention ."o-uS 

15.  Sharing  Both  Profits  and  Losses .o.V-57 

16-17.                         Sharing  Profits  Only 58-63 

18.  Sharing  (Iross   Returns 63-67 

19.  Contemplated   Partnerships    67-70 

20.  Promoters  of  Corporation 70-71 

21.  Defective  Corporations 71-73 

22.  Delectus  Personarum 74—75 

28.            Specific  Performance 75-79 

24-25.           Subpartnerships    79-80 

28.           Partnership  by  Estoppel— Holding:  Out 80-87 


CHAPTER  TL. 

KINDS  OF  PARTNERSHIPS  AND  PARTNERS. 

27.  Classification  of  Partnerships 88 

28.  Ordinary  Partnerships — Universal,  General,  and  Special  or  Par- 

ticular         88-S9 

29.  Limited   Partnerships 90 

GEO.  PA  I  IT.  (V) 


VI  TABLE    OF    CONTEMS. 

Section  P"^K» 

80.    Joint-Stock  Companies OO-Ol 

31.  Trading  and  Nontrading  Partnerships 91-92 

32.  Mining  Partnerships   92 

33.  Classification  of  I'arlntTs 93-97 


CHAPTER  in. 

CHARACTERISTIC  FEATURES  OF  PARTNERSHIPS. 

84-85.     Partnership  as  an  Entity— Legal  and  Mercantile  View 98-104 

36.     Partnership  Name 1U5-112 

87-88.     Partnership  Property   113 

39.  Partnership  Capital 113-114 

40.  Contributions  Other  than  in  Money H-i 

41-42.  Partners'  Rights  as  to  Capital 114-117 

43.  Advances  by   Partner 117 

44.  Limitations  as  to  Contributions  to  Capital 118-119 

45.  Partnership  Property  in  General 119 

46.  What  Constitutes 119-121 

47.  Property  Habitually  In  Use  of  Firm 121-124 

48.  Property  Purchased  with  Partnership  Funds 124-126 

49.  Title  to  Real  Estate 126-127 

50.  When  Partnership  Realty  Deemed  Personalty 127-129 

61-52.  Conversion  of  Partner.ship  Property  into  Separate  Prop- 
erty, and  Vice  Versa 129-132 

53.     Partnership   Shares  132 

54—55.  Nature  of   Partiier's  Interest 132-187 

56-57.  Amount  of   Each   Partner's   Rhnre 138-141 

58.  Sale  of  Partner's  Interest  on  ExL(iili')n 141-152 

69-60.  Transfer  of  Shares 153-156 


CHAPTER  IV. 

IMPLIED    RIGHTS   AND    LIARILITILS   INTER    SB. 

61.  Right  to  Participate  in  Ma iki gement 157-168 

62-64.  Rights  and  Powers  of  Majority 158-159 

65.  Duty  to  Exercise  Care  and  Skill 160 

66.  Duty  to  Observe  Good  Faith 160-162 

67.  Right  to  Benefits  from  Transactions  Concerning  Firm  Inter- 

ests     162-164 

68.  Right  to  Compete  with  Firm 164 

68.  Right  to  Benefits  Resulting  from  Connection  with  Firm.  ...  166 


TABLE    OF    CONTENTS.  vii 

Section  p^g^ 

70.  Right  to  Compensation  for  Services 165-168 

Tl-72.  Right  to  Interest  on  Balances 168-171 

73.  Right  of  Partner  to  Indemnity  and  Contribution 171-176 

74.  Duty  to  Conform  to  Agreement 176-177 

75.  Right  to  Information  as  to  Conduct  of  Business 177-178 

76.  Duty  to  Keep,  and  Right  to  Inspect,  Accounts 178-179 

T7-79.  Right  to   hare   Partnership    Property   Applied   to   Partnership 

Debts — Partner's  Lien 179-184 

80-81.    Division  of  Profits 184-187 


CHAPTER  V. 
ARTICLES  OF  PARTNERSHIP. 

82.    In  General— Purpose  and  Effect 188-189 

8S-87.     Rules  of  Construction 189-196 

88.     Usual  Clauses  in  Articles 196-210 

(a)  The  (Jeneral  Nature  of  the  Business 197-198 

(b)  The  Time  When  the  Business  shall  Coiiiinonce 198 

(c)  The  Duration  of  the  Relation 199 

(d)  The  Name  or  Style  of  the  Firm 199-200 

(e)  The  Capital,  Advances,  etc 200-202 

(f)  Rights  of  the  Partners  in  Firm  Property 203 

(g)  Profits  to  be  Distributed 203 

(h)     Duties  Resting  upon  Partners 203-204 

(i)     Keeping  of  Proi>er  Books  of  Account 204 

(j)     Restraint  upon  Partners  as  to  Their  Exercising  Similar 

Business  on  Individual  Account 205 

(k)    Decision  of  Differences  among  Partners  by  a  Majority..  .         205 

(1)     Annual  Account   205-206 

(m)     General  Account  upon  Dissolution 206 

(n)     Representatives  of  Deceased  Partner  Succeeding  to   His 

Share  in  Firm  Business 206-207 

(o)     Retirement  of  a  Partner  and  Assignment  of  His  Share..  .207-208 

(p)    Clause  of  Expulsion 208-209 

(q)     Arbitration   209 

(r)     Liquidated  Damages 210 


viii  TABLE    OF    COMENXa. 

CHAPTER  VI. 

RIGHTS  AND  LIABILITIES  AS  TO  THIRD  PERSONS. 

Section  ^*** 

M).     Power  of  Partner  to  Bind  Firm 211 

90.  Express  Authority   212-213 

91-93.  Implied  Authority 213-216 

94.  Particular  Powers 2U)-221 

95.  Sealed   lDstrum«^nts   222-224 

96.  Bills  and  Notes 224-228 

97.  Borrowing    22S-230 

98.  Simple  Contracts   230-231 

99.  Buying  and   Selling 231-234 

100.  Notice   234-23.-. 

101.  Liabilities  of  I'artners  to  Third  Persons 23r. 

102.  In  Contract 23(1 

103.  Restrictions  by  Dissent 236-237 

104.  I'orra  of  Contract 237-242 

lO."!.  In  Tort 242-24r, 

lOlJ-lOS.    Joint  and  Several  Liability 245-240 

100.     Extent  of  Liability 240 

110.  Beginning  of  Liability 250-251 

111.  Incoming  Partners 251-252 

112-114.  Assumption  of  Debts 252-256 

115.  Termination  of  Liability 257 

116.  Future  Acta  257-264 

117.  Dormant  Partner 2(54-265 

118.  Past  Acts 205-273 

110.     Rifc'hts  in  Firm  and  Separate  Property 273 

120.  Firm  Creditors  in  Firm  Property 274-280 

121.  Partners  in  Firm  Property 280-283 

122.  Separate  Creditors  in  Firm  Property 283-284 

123.  Separate  Creditors  in  Separate  Property 285-287 

124.  Firm  Creditors  in  Separate  Property 287-203 

125.  Partners  in  Separate  Property 203-206 

126.  Joint  and  Separate  Creditors  in   Firm  and  Separate  Prop- 

erty     296-297 


TABLE    OF    CONTENTS.  tx 


CHAPTER  Vn. 

ACTIONS  BETWEEN  PARTNERS. 

Section  Page 

127.  Action  on  Partnership  Claim  or  Liability— At  Law 298-304 

128.  In  Equity   304^308 

129.  Under  the  Code 308-309 

130.  Actions  between  Firms  with  Common  Member 309-314 

131.  Action  at  Law  on  Individual  Obligation 314 

132.  Claims  not  Connected  with  Partnership 315 

133.  Claims  for  Agreed  Final  Balances 315-317 

134.  Express  Contracts  between  Partners 317-321 

135.  Losses  Caused  by  Partner's  Wrong 322-325 

13fi.     Equitable  Actions  in  General — Jurisdiction 325-326 

137.  Necessity  of  Praying  for  a  Dissolution 326-327 

138.  Noninterference  in  Matters  of  Internal  Regulation 327-328 

139.  Effect  of  Laches 328-332 

140.  Accounting  and   Dissolution 332-333 

141.  Right  to  Accounting 334 

142.  .\cconiiting  upon   Dissolution 334—337 

143.  Accounting  without  Dissolution 337-344 

144.  Specific    Performance 344-345 

145.  Injunction    345-350 

146.  Receivers    350-361 


CHAPTER  Vm. 

ACTIONS   BETWEEN   PARTNERS  AND  THIRD   PERSONS. 

147.  In   General    862 

148.  Parties  to  Action  on  Firm  Claim 862 

149.  Claims  Arising  ex  Contractu 363 

150.  Contracts  in  Firm  Name 363-364 

151.  Contracts  in  Name  of  Partner 365-370 

152.  Claims  Arising  ex  Delicto 371-372 

153.  Parties  to  Action  on  Firm  Liability 372 

154.  Liabilities  Arising  ex  Contractu 372-377 

155.  Liabilities  Arising  ex  Delicto 378 

156.  Effect  of  Changes  in  Firm 378 

157-159.  Admission  of  New  Member 379-381 

160-162.  Retirement  of  Old   Member 381-384 

163.  Death  of  Member 384-385 


X  TABLE    OF    CONTENTS. 

Section  ^'^ 

104-167.    Effect  of  Changes  In  Firm— Bankruptcy  and  Insolvency 385-3S6 

168.  Disqualification  of  one  Partner  to  Sue 387-391 

169.  Action  in   Firm  Name •*''- 


170. 
171. 
172. 


173. 
174. 


175. 


176. 
177. 
178. 
179. 
180. 
181. 
182. 
183. 


CHAPTER  IX. 

DISSOLUTIO.N. 

Causes  of  Dissolution— Partnership  for  a  Definite  Time 393-395 

Partnership  for  an  Indefinite  Time 39.»-396 

Causes  Subject  to  Stipulation 3U6— 101 

(a)  Death  of  Partner 39i 

(b)  Alienation  of  Partner's  Share 307-399 

(c)  Bankruptcy  of  Partner 3'.)'.) -101 

(d)  Marriape  of  a  Feme  Sole  Partner 401 

Expulsion     -lOl-*"" 

Causes  not  Sulijoct  to  Stipulation 402-404 

(a)  Events  Rendering  Business  Unlawful 402 

(b)  Bankruptcy  of  tlw  Firm 403-404 

Causes  for  which  a  Court  will  Decree  a  Dissolution 404-406 

(a)  Insanity  or  Other  Incfimpotency  of  a  Partner 404 

(b)  Misconduct  of  a  Partner 404-40G 

(c)  Impossibility  of  Making  Profit 406 

Consequoncea  of  Dissolution— As  to  Third  Persons 407-40S 

As  to  the  Partners 40>s 

Winding  Up  Business 408-411 

Notice  of  Dissolution 411 

Sale  of  (lood  Will 412-li:{ 

Payment  of  Firm  Debts 4i:5-414 

Earnings  after  Dissolution 414-41.') 

Disposition  of  Surplus  Property 415-416 


184-185. 
186-188. 
189-190. 

191. 

192. 

193. 

194. 

195. 


CHAPTER  X. 

LIMITED  PARTNERSHIPS. 

General  Nature— Definitions  418-421 

Establishment  of  Relation 421-423 

Purposes    423—428 

Members,  General  and  Special 428 

Certificate    429-431 

Acknowledgment    432-433 

Record    433-435 

Publication   435  '^41 


TABLE    OF    CONTENTS. 


XI 


Section  Page 

196.  Establishment  of  Kelation— AfBdavit 441 

197.  Contribution  of  General  and  Special  Partners 442-444 

198.  Firm  Name 445-448 

199.  Firm  Sign 449-450 

200-201.  When  Partnership  Begins 450-452 

202.  Renewals 452-455 

203.  Rights  and  Liabilities 455 

204-205.  Liability  for  Debts 456-457 

206.  Defective  or  Delayed  Formation 458 

207.  Effect  inter  Se 458-459 

208-209.  Effect  as  to  Third  Persons 459^61 

210.  Rij:hts  in   Firm   Property 461-462 

211-212.  Withdrawal  of  Profits  or  Capital 463-467 

213.  Alter.ition    468-472 

214.  Interference    472-477 

215-216.  Insolvency   477^78 

217-218.  Fraudulent    Conveyances 478-480 

219.  Property  a  Trust  Fund  for  (Creditors 480-432 

220.  Assignment  for  Benefit  of  Creditors 483-484 

221-222.  Special  Partner  as  Creditor 484-487 

223.  Termination  of  Kelation— Dissolution 487 

224.  Termination  of  Future  Liability 487 

225-226.  By  Operation  of  Law 487^91 

227.  By  Act  of  Parties 491-493 

228.  Change  from  Limited  to  General  Liability 493 

220.     Actions— Between    Members 493^94 

230.  Between  Firm  and  Third  Persons 494-497 


CHAPTER  XI. 

JOI NT-STOCK  COMPANIES. 

231.  In   General 498 

232.  Transfer  of  Shares 498-499 

233-234.  Powers  of  Members  and  Ofiicers 499-500 

235-236.  Rights  and  Liabilities  of  Members  inter  Se 500-501 

237.     Liability  of  Members  to  Third  Persons 501-502 

238-239.    Actions  by  and  against  Joint-Stock  Companies 502-503 

240.    Dissolution  of  Joiat-Stock  Companies 503-504 


t 


HANDBOOK 


ON     THE 


LAW  OF  PARTNERSHIP, 


CHAPTER  I. 

DEFINITION  AND  ESTABI^ISHMENT  OF  RELATION. 

1.  Partnership  Defined. 

a-S.  Estnblisbincnt  of  Relation. 

4.  Compi-tcncy  of  Parties. 

C.  Consideration. 

6.  Formalities. 

7-8.  Subject-Matter. 

0.  Intention  to  be  Partners— What  Constitutes  a  Partnership. 

10.  Development  of  Modern  Doctrine. 

11.  Grace  v.  Smith. 

12.  Waugh   V.   Carver. 

13.  Cox  V.  Hiclcman. 

14.  Tests  of  Intention. 

15.  Sharing  Both  Profits  and  Losset. 
16-17.  Sharing  Profits  Only, 

18.  Sharing   Gross  Returns, 

19.  Contemplated  Partnerships. 

20.  Promoters  of  Corporation. 

21.  Defective    Corporations. 

22.  Delectus  Personarum. 

23.  Specific  Performance. 
24-2.'5.  Subpartnerships. 

26.  Partnership  by  Estoppel— Holding  Out 
GEO.PABT.— 1 


DEFianioa  and  establishment  of  relation.  (Ch.  1 


PARTNERSHIP  DEFINED. 

1.  Partnership  is  the  relation  existing  between  persons 
-who  have  so  contracted  that  the  profits  of  some 
business  enterprise  conducted  by  any  or  all  of  them 
for  them  all  enure  to  all  as  co-owners,  and  are 
shared  accordingly. 

The  most  diflBcult  question  involved  in  a  consideration  of  the  law  of 
partnership  is  the  determination  of  what,  hi  fact,  constitutes  a  part- 
nership. Indeed,  some  of  the  best  minds  that  have  grappled  with  the 
subject  have  been  reluctant  to  formulate  a  definition,  and  the  suc- 
cess of  those  who  have  overcome  this  reluctance  must  have  been  small 
to  merit  the  remark  of  an  eminent  jurist  of  to  day  that  "the  various 
definitions  have  been  approximate  rather  than  exhaustive."  ^  Tlic 
above  definition  is  submitted,  therefore,  with  considerable  dit!idence.^ 

1  Meehan  v.  Valentine.  145  U.  S.  611,  12  Snp.  Ct-  972.  A  number  of  definitions 
are  collected  in  Lindl.  Partn.  p.  3,  of  which  tlic  following  are  a  fi-w: 

Code  of  Civil  Procedure  of  New  York:  "Partnership  is  the  association  of  two 
or  more  persons  for  the  purpose  of  carrying  on  business  together,  and  dividing  its 
profits  between  them."      Section  12S;i. 

Dixon:  "A  partnership  is  a  voluntary  unincorporated  association  of  individuals 
standing  to  one  another  in  the  relation  of  principals  for  carrj-ing  out  a  joint  oper- 
ntion  or  undertaking  for  the  purpose  of  joint  profit."      Dix.  Partn.  1. 

Kent:  "Partnership  is  a  contract  of  two  or  more  comix»tent  persons  to  placo 
their  money,  effects,  labor,  and  skill,  or  some  or  aJl  of  them,  in  lawful  commerce 
or  business,  and  to  divide  the  profit  and  bear  the  loss  in  certain  proportions. 
3  Kent,  Comm.  23. 

Indian  contract  act:  "Partnership  is  the  relation  which  subsists  between  per- 
sons who  have  agreed  to  combine  their  property,  labor,  or  skill  in  some  business, 
and  to  share  the  profits  thereof  between  them."     Indian  Contract  Act,  §  239. 

Parsons:  "Partnership  Is  the  combination  by  two  or  more  persons  of  capital 
or  labor  or  skill,  for  the  purpose  of  business  for  their  common  benefit"     T.  Pars. 


«  Throughout  this  book,  and  in  the  cases  and  other  books  as  well,  partners  are 
frequently  spoken  of  aa  joint  owners  of  the  profits.  The  phrase  "joint  owners," 
used  in  this  connection,  does  not  mean  owners  in  joint  tenancy.  Partnership  Is 
merely  one  species  of  joint  ownership.  It  is  as  distinct  a  class  as  Is  either  of  the 
other  forms  of  joint  ownership,  viz.  joint  tenancy,  tenancy  in  common,  estates  in 
entirety,  and  estates  in  co-parcenary. 


§    1)  PARTNERSHIP    DEFINED  3 

Partnerships  inter  Se  and  as  to  Third  Persons. 

Much  of  tke  difficulty  involved  in  stating  the  essential  elements  of 
a  partnership  arises  from  an  ambiguous  use  of  the  term.  Thus,  it  is 
used  to  describe  the  actual  relation  existing  between  persons  who  are 
really  partners  as  between  themselves.  This  is  its  only  proper  sense. 
But  it  is  also  used  to  describe  the  relation  existing  between  persons 
who  are  not  really  partners  as  between  themselves,  but  who  are  liable 
to  third  persons  as  though  they  were.  Thus,  a  given  state  of  facts  is 
frequently  said  to  render  the  individuals  involved  "partners  as  to  third 
persons."  This  is  an  erroneous  use  of  the  term,  and  very  misleading. 
A  partnership  does  not  exist  as  to  third  persons  when  none  actually 
exists  between  the  persons  themselves.  It  is  true  that  a  third  person 
may  sometimes  succeed  in  subjecting  some  one  to  such  a  liability  as 
would  be  a  partner's  when  he  has  really  no  part  in  the  partnership  at 
all;  •  but  the  fact  remains  that  the  relation  depends  on  what  the  par- 
ties have  made  it.  'Tartnership  is  a  relation  inter  se,  and  the  word 
cannot  in  strictness  be  used  except  to  signify  that  relation."  * 

Partn.  c.  2,  §  1.  Tbxs  definition  is  inaccurate.  ITie  word  denotes  a  combination 
of  persons,  not  a  combination  of  capital. 

Pollock:  "Partnership  is  the  relation  which  subsists  between  persons  who  have 
agreed  to  share  the  profits  of  a  busiut'ss  carried  on  by  all  or  any  of  them  on  behalf 
of  ail  of  them."     Pol.  Partn.  (3d  Ed.)  §  4. 

Rutherford:  "When  two  or  more  persons  join  money  or  goods  or  labor,  or  all 
of  these  together,  and  agree  to  give  each  other  a  common  claim  upon  such  joint 
stock,  this  is  partnership."      Ruth.  Inst.  bk.  1,  c.  13,  §  9. 

Story:  "Partnership,  often  called  co-partnership,  is  usually  defined  to  be  a  vol- 
untary contract  between  two  or  more  competent  persons  to  place  their  money, 
efifects,  labor,  and  skill,  or  some  or  all  of  them,  in  lawful  commerce  or  business, 
with  the  understanding  that  there  shall  be  a  communion  of  the  profits  thereof  be- 
tween them."  Story,  Partn,  §  2.  Partnership  is  the  association  of  two  or  more 
persons  for  the  purpose  of  carrying  on  business  together,  and  dividing  its  profits 
between  thorn.  Cal.  Civ.  Code,  §  2305;  Dak.  Comp.  Laws  1SS7,  §  4027;  N.  D. 
Rev.  Code  1S95.  §  4370. 

«  Bates,  Partn.  1136;  Walker  v.  Matthews,  58  111.  11)6;  Robinson  v.  Green'i 
Adm'r,  5  Har.  (Del.)  115.  A  partnership,  as  to  third  persons,  may  be  shown  by 
facts  which  would  not  prove  a  partnership  inter  se.  Bissell  v.  Warde,  129  Mo. 
439,  31  S.  W.  91S. 

*  Beecher  v.  Bush,  45  Mich.  188,  7  N.  W.  785.  See,  also,  Bullen  v.  Sharp 
{"Ei^ch.  Chamb.)  L.  R,  1  C.  P.  86;  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  O.  419. 
In  the  former  case,  Bramwell,  B.,  said,  as  to  the  distinction  sometimes  made 
between  partnership   inter  se   and   as  to   third    persons:     "The  burden   of   proof 


4  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

Partnerships  Distmguished  from  Corporations. 

A  corporation  is  a  fictitious  person,  created  by  special  authority  (in 
this  country  by  the  legislature;  in  England  by  the  crown  or  by  parlia- 
ment), and  endowed  by  that  autliority  with  a  capacity  to  acquire 
rights  and  incur  obligations,  as  a  means  to  the  end  for  the  attainment 
of  which  the  corporation  is  created.  A  corporation,  it  is  true,  con- 
sists of  a  number  of  individuals;  but  the  rights  and  obligations  of 
these  individuals  are  not  the  rights  and  obligations  of  the  fictitious 
person  composed  of  those  individuals;  nor  are  the  rights  and  obliga- 
tions of  the  body  corporate  exercisable  by  or  enforceable  against  the 
individual  members  thereof,  either  jointly  or  separately,  but  only  col- 
lectively, as  one  fictitious  v\hole.  The  share  of  a  member  of  a  cor- 
poration may  be  transferred  by  death  or  otherwise  without  affecting 
the  identity  of  the  corporation,  which  remains  the  same,  though  all 
of  its  members  may  have  changed.  The  liability  of  stockholders  is 
usually  limited  to  the  amount  of  their  uni)aid  subscriptions.  Profits, 
when  earned,  belong  to  the  fictitious  entity,  not  to  the  individuals 
composing  it.  With  partnerships  the  case  is  otherwise.  The  members 
of  these  do  not  form  a  collective  whole,  distinct  from  the  individuals 
composing  it;  nor  are  they  collectively  endowed  with  any  capacity 
of  acquiring  rights  or  incurring  obligations.  They  are  created  by 
act  of  the  parties,  and  not  by  public  franchise.  The  rights  and  lia- 
bilities of  a  partnership  are  the  rights  and  liabilities  of  the  partners, 
and  are  enforceable  by  and  against  them  individually.     The  transfer 

•     •     •     Is  on  the  plaintiffs.     Now,  what  reason  do  they  give?     They  say  that 

the  defendant  is  a  partner  with  his  son;  and  that,  if  not  partners  inter  so.  they  are 
80  as  regards  third  parties.  A  most  remarkable  expression!  Partnership  means 
a  relation  between  two  parties.  How,  then,  can  it  be  correct  to  say  that  A.  and 
B.  are  not  in  partnership  as  between  themselves?  They  have  not  held  themselves 
out  as  being  so,  and  yet  a  third  person  has  a  right  to  say  they  are  so  as  relates 
to  him.  But  that  must  mean  inter  se;  for  partnership  is  a  relation  inter  se,  and 
the  word  cannot  be  used  except  to  signify  that  relation.  A.  is  not  the  agent  of 
B.  B.  has  never  held  him  out  as  such;  yet  C.  is  entitled,  as  between  himself 
and  B.,  to  say  that  A.  is  the  auent  of  B.  WTiy  is  he  so  entitled,  if  the  fact  is 
jot  so,  and  B.  has  not  so  represented?" 

"We  also  think  there  can  be  no  such  thing  as  a  partnership  as  to  third  persons 
when,  as  between  the  parties  themselves,  there  is  no  partnership,  and  the  third 
persons  have  not  been  misled  by  concealment  of  facts  or  by  deceptive  appearances." 
Beecher  v.  Bush,  supra. 


§    1)  PARTNERSHIP    DEFINED.  5 

of  one  partner's  interest  by  death  or  otherwise  works  a  dissolution 
of  the  partnership.  Partners  are  usually  personally  liable  for  all 
the  debt  of  the  partnership.  Profits,  when  earned,  belong  to  all  the 
partners  as  joint  owners. 

Co-mvnership  and  Partnei^ship  Distingimhed. 

No  partnership  necessarily  subsists  among  persons  to  whom  prop- 
erty descends,  or  is  given  jointly  or  in  common;"  and  even  if  sev- 
eral persons  agree  to  buy  property,  to  hold  jointly  or  in  common, 
although  by  the  purchase  they  become  co-owners,®  they  do  not 
become  partners  unless  that  also  was  their  intention.''  Speaking 
generally,  and  excluding  all  exceptional  cases,  the  principal  differ- 
ences between  co-ownership  and  partnership  may  be  stated  as  fol- 
lows: (1)  Co-ownership  is  not  necessarily  the  result  of  agreement; 
pa- tnership  is.'  (2)  Co-ownership  does  not  necessarily  involve  com- 
munity of  profit  or  of  loss;  piirtnership  does.®  (3)  One  co-owner 
can,  without  the  consent  of  the  others,  transfer  his  interest  to  a 
stranger,  so  as  to  put  him  in  the  same  position  as  regards  the  other 
owners  as  the  transferror  himself  was  before  the  transfer;  a  partner 
cannot  do  this.^"  (4)  One  co-owner  is  not  as  such  the  agent  real 
or  implied  of  the  others;   a  partner  is."     (5)  One  co-owner  has  no 

B  Dunham  v.  Ix)verock,  158  Pa.  St.  197,  27  Atl.  990,  Where  premises  and  the 
business  conducted  thereon  and  the  appliances  are  devised  to  two  persons,  and 
they  continue  the  business,  each  contributing  thereto  his  share  of  the  property, 
they  become  partners,  and  the  premises  are  partnership  property.  MacFarlane  v. 
MacFarlane,  82  Hun,  238,  31  iN.  Y.  Supp.  272. 

«  Hoare  v.  Dawes,  1  Doug.  371.  As  to  whether  joint  purchasers  become  tenants 
in  common,  or  joint  tenants,  see  Lake  v.  Gibson,  1  Eq.  Cas.  Abr.  290;  Aveling 
▼.  Knipe,  19  Ves.  441;  Cr^sfield  v.  Such,  8  Exch.  825;  Harris  v.  Fergusson, 
16  Sim.  308;  Robinson  v.  Preston,  4  Kay  &  J.  505;  Bone  v.  Pollard,  24  Beav. 
283;  Harrison  v.  Barton,  1  Johns.  &  H.  287,  in  which  the  admissibility  of  parol 
evidence  on  the  point  was  much  discussed.  In  French  v.  Styring,  2  C.  B.  (N.  S.) 
357,  the  race  horse  was  clearly  held  in  common,  the  owners  having  become  such 
at  different  times  and  by  different  titles. 

T  Stevens  v.  McKibbin.  15  C.  C.  A.  498.  68  Fed.  406.  See  Kay  v.  Johnston, 
21  Beav.  536.  Whether  they  intended  to  become  partners  or  not  may,  of  course, 
be  doubtful,  as  in  Sharpe  v.  Cummings,  2  Dowl.  &  L.  504,  where  two  persons 
hired  a  field  wherein  to  graze  their  cattle.  See  post,  p.  30,  "Intention  to  be  Part- 
ners." 

8  See  definition,   ante,  p.  2.    Also,  see  post,  p.  50;    Story,  Partn.  §§  3,  89-94. 

»  See  post,  p.  34  et  seq.  lo  See  post,  p.  153.  "  See  post,  p.  37  et  seq. 


6  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.   1 

lien  on  the  thing  owned  in  common  for  outlays  or  expenses,  nor  for 
what  may  be  due  from  the  others  aa  their  shai*e  of  a  common  debt; 
a  partner  has.*' 

Same — Co-owners  Sharing  Profits. 

WTien,  however,  co-owners  of  property  employ  it  with  a  view  to 
profit,  and  divide  the  profit  obtained  by  its  employment,  the  differ- 
ence, if  any,  between  them  and  partners,  becomes  very  obscure. 
The  point  to  be  determined  is  whether,  from  all  the  circumstancefl 
of  the  case,  an  agreement  for  a  partnership  ought  to  be  inferred; 
but  this  is  often  an  extremely  difficult  question.**  If  each  owner 
does  nothing  more  than  take  his  share  of  the  gross  returns  obtained 
by  the  use  of  the  common  property,  partnership  is  not  the  result. 
On  the  other  hand,  if  the  owners  convert  those  returns  into  money, 
bring  that  money  into  a  common  stock,  defray  out  of  it  the  ex- 
penses of  obtaining  the  returns,  and  then  divide  the  net  profits, 
partnership  is  created  in  the  profits,  if  not  also  in  the  property  which 
yields  them.**     Many  perplexing  cases  may  be  imagined  interme- 

i«  If  two  persouB  buy  a  horse,  each  paying  one-half  of  the  purchase  money, 
ander  an  agreement  that  either  of  them,  having  possession  of  the  horse,  shall 
provide  for  his  keeping,  witliout  cost  to  the  other,  and  that  each  shall  offer  the 
horse  for  sale  and  endeavor  to  procure  a  purchaser  at  a  profit  over  bis  cost,  but 
that  neither  shall  sell  the  horse  without  the  concurrence  of  the  other,  they  are 
tenants  in  common  of  the  horse,  and  not  partners;  and  neither  party  has  any 
lien  upon  the  share  of  the  other  for  expenses  incurred  cither  for  labor  dom 
upon  the  horse,  as  by  shoeing,  or  for  advertising  him  for  sale.  Goell  v.  Morse, 
126  Mass.  480.  See,  also,  post,  p.  179,  "Partner's  Lien."  And  see  Oliver  v. 
Gray,  4  Ark.  425;  Goodrich  v.  Willard,  7  Gray  (Mass.)  183;  Chapman  ▼. 
Eames,  67  Me.  452;   Quackenbush  v.  Sawyer,  54  Cal.  4.'}9. 

18  See  Sargent  v.  Downey,  45  Wis.  498;  Thurston  v.  Horton,  16  Gray  (Mass.) 
274;  Chisholm  v.  Cowles,  42  Ala.  179.  Part  owners  of  a  vessel  are  tenants  in 
common,  not  partners.      Coursin's  Appeal,  79  Pa.  St.  220;    Paynter  v.  I'aynter, 

7  Phila.  336;  Macy  v.  De  Wolf,  3  Woodb.  &  M.  193,  Fed.  Gas.  No.  8,933.  See. 
also,  post,  note  21. 

I*  Lindl.  Partn.  53.  Each  of  two  firms  bought  an  undivided  interest  in  cer- 
tain leases  of  laud  on  which  an  oil  well  had  been  built,  and  prepared  the  well  for 
pumping,  each  paying  oue-half  the  expense.  When  the  first  well  was  put  in 
order,  they  built  another  well,  and  divided  the  expense  incurred.  The  oil  was 
fun  into  pipe  lines  through  the  district,  and  one-half  of  it  was  credited  to  each 
firm.  Held  not  to  show  a  partnership.  Butler  Sav.  Banlc  v.  Osborne,  159  Pa. 
Bt.  10,  28  Atl.  163.      See,  also,  instances  of  the  sharing  of  gross  profits,  post,  p. 


§    1)  PARTNERSHIP   DEFINED.  7 

diate  between  those  here  put  as  examples,  but  the  following  illus- 
trations will,  it  is  hoped,  enable  the  reader  to  appreciate  the  dis- 
tinction in  question. 

Joint  Purchasers  of  Goods  for  Resale. 

If  several  persons  jointly  purchase  goods  for  resale,  with  a  view 
to  divide  the  profits  arising  from  the  transaction,  a  partnership  is 
thereby  created. ^"^  But  persons  who  join  in  the  purchase  of  goods, 
not  for  the  purpose  of  selling  them  again,  and  dividing  the  profits, 
but  for  the  purpose  of  dividing  the  goods  themselves,  are  not  part- 
ners, and  are  not  liable  to  third  parties  as  if  they  were.  Coope  v. 
Eyre  ^'  is  a  leading  case  in  support  of  this  proposition.  There  an 
agreement  was  come  to  that  one  person  should  purchase  oil,  and 
then  divide  it  among  himself  and  others,  they  paying  him  their 
proportion  of  the  price.  The  oil  was  bought  accordingly,  and,  the 
purchaser  becoming  bankrupt,  the  seller  sought  to  make  the  other 
parties  to  the  agreement  pay  for  the  oil.  But  it  was  held  that  the 
purchaser  purchased  as  a  principal,  and  not  as  an  agent,  and  that, 
as  there  was  no  community  of  profit  or  loss,  the  persons  among 
whom  the  oil  was  to  be  divided  could  not  be  made  liable  as  part- 
ners. In  Hoare  v.  Dawes  ^^  there  was  a  similar  agreement,  and  Lord 
Mansfield  thought  at  first  that  there  was  a  partnership  as  to  third 
persons;  but  he  ultimately  decided  that  there  was  not,  there  be- 
ing no  agreement  to  share  profit  or  loss,  and  there  being  no  pre- 
tense for  holding  the  purchasers  liable  for  the  acts  of  each  other 

65.  As  to  co-ownership  in  mines  and  mining  partnerships,  see  Lindl.  Partn.  p. 
55  et  seq.;  Kahn  v.  Smelting  Co.,  102  U.  S.  641;  Tipping  v.  Robbins,  64  Wis. 
546,  25  N.  W.  713;  Bissell  v.  Foss,  114  U.  S.  252,  5  Sup.  Ct.  851.  For  extend- 
ed  note  on  remedies  available  to  one  co-owner  against  the  others,   see  Lindl. 

Partn.  p.  57. 

13  Ileid  V.  Holliushead,  4  Barn.  &  C.  S67.  An  agreement  between  two  per- 
sons that  they  will  undertake  jointly  the  enterprise  of  buying  a  piece  of  land 
and  selling  it  again  at  an  advance,  each  to  have  one-half  the  profits,  does  not 
constitute  a  partnership.  Gottschalk  v.  Smith,  54  111.  App.  341,  affirmed  156 
111.  377,  40  N.  E.  937. 

!•  1  H.  Bl,  37.  See,  also,  Hurley  v.  Walton,  63  111.  260;  Stoallings  v.  Baker, 
15  Mo.  481;  Oilman  v.  Cunningham,  42  Me.  98.  Cf.  Everitt  v.  Chapman,  6 
Conn.  347;  Loomis  v.  Marshall,  12  Conn.  85-87;  Ensign  v.  Wands,  1  Johns. 
Gas.  171;   Farmers'  Ins.  Co.  ▼.  Ross,  29  Ohio  St.  429. 

"  1  Doug.  371. 


8  DBFINITION    AND    ESTABLISHMENT    OF    KKLATION.  (,Ch.    1 

hy  reason  of  their  holding  themselves  out  as  partners.  So,  in  Gib- 
son 1.  Lupton,^*  two  persons  joined  in  the  purchase  of  some  wheat, 
with  the  intention  of  dividing  and  paying  for  it  equally;  and  it 
was  held  that,  as  there  was  no  joint  interest  in  profit  or  loss,  they 
could  not  be  considered  partners,  either  as  between  themselves  or 
as  regarded  third  parties. 

Part  Ovmers  Sharing  the  Produce  of  Their  Property. 

Moreover,  part  owners  who  divide  what  is  obtained  by  the  use  or 
employment  of  the  thing  owned  are  not  thereby  constituted  piu-t- 
ners.  For  example,  if  two  tenants  in  common  of  a  house  let  it, 
and  divide  the  rent  equally  among  them,  they  are  not  partners, 
although  they  may  pay  for  repairs  out  of  the  rent  before  tlividing 
it/*  So,  two  persons  who  are  tenants  in  common  of  a  race  horse, 
and  share  his  winnings  on  the  one  hand,  and  the  expenses  of  his 
keep  on  the  other,  are  not  partners,  but  co-owners  only."*  So,  part 
owners  of  ships  are  not  usually  partners,*'  although  they  may  be 
partners  as  well  as  part  owners,  as  was  the  case  in  Campbell  v. 
Mullett." 

Pa/rtnerahip  Distinguished  froTn  Agency. 

Tlie  law  of  partnership  is  closely  connected  with  the  law  of  agency. 
"Everybody  knows  that  a  partnership  is  a  sort  of  agency,  but  a  very 
peculiar  one."  ••  A  partner  virtually  embraces  both  the  character 
of  a  principal  and  an  agent.  It  would  be  impossible  at  this  place 
to  explain  in  any  brief  form  of  words  the  rule  for  determining  when 

i«9  Blng.  297. 

i»  Per  Willis.  J.,  In  French  t.  StyrinB.  2  C.  B.  (N.  S.)  357,  3G6.  Cf.  Butler 
Say.  Bank  v.  Osborne,  159  Ta.  St.  10,  28  Atl.  103.  See,  ajgo,  London  Financial 
Ass'n  T.  Ktlk,  20  Ch.  Div.  107,  and  Lyon  v.  Knowles,  3  Best.  &  S.  550. 

10  French  v.  Styring,  2  C.  B.  (N.  S.)  357.  Evidence  that  two  fanners,  pur- 
chasing a  threshing  machine,  paid  for  the  same  with  their  joint  and  several 
notes,  secured  by  a  chattel  mortKaRe  on  the  niachiue  purchased,  and  jointly 
took  possession  of  and  used  the  machine  in  threshing  grain  for  others,  will  not 
support  a  finding  that  the  threshing  machine  was  partnership  property,  nor  that 
a  co-partnership  relation  existed  between  the  farmers.  State  Bank  of  Lushton  v. 
O.  S.  Kelley  Co.  (N<;b.)  GO  N.  W.  019. 

«i  Ilelme  v.  Smith,  7  Biug,  709;  Ex  parte  Young,  2  Ves.  &  B.  242;  Ex  parte 
Harrison,  2  Rose,  70;    Green  v.  Briggs,  0  Hare,  395;    and  cases  cited  ante,  note 

18. 

««  2  Swanst.  55L  ■»  Pooley  t.  Driver,  5  Ch.  Div.  458. 


§§    2-3)  ESTABLISHMENT    OF    RELATION.  9 

one  is  a  partner  and  when  one  is  an  agent.  This  will  appear  fully 
in  the  discussion  of  what  constitutes  a  partnership.  It  will  be  suffi- 
cient at  this  point  to  anticipate  the  results  of  that  discussion.  If 
an  agreement  for  the  conduct  of  a  business  and  a  sharing  of  the 
profits  results  in  a  joint  ownership  of  the  profits,  the  parties  are 
partners.**  But  if  the  agreement  does  not  make  the  parties  joint 
owners  of  the  profits,  but  one  of  them  takes  a  share  in  them,  not 
because  he  is  an  owner  of  a  proportionate  part  of  them,  but  because, 
under  the  contract,  the  other  party  owes  him  that  sum  as  a  debt 
for  services  rendered,  he  is  an  agent.  The  real  intention  of  the 
parties,  and  not  the  mere  form  of  words,  controls." 

ESTABLISHMENT  OF  RELATION. 

2.  A  partnership  is  created  only  by  contract,  never  by  op- 

eration of  la-wr. 

3.  The  contract  of  partnership  must  satisfy  in  all  respects 

the  requisites  of  a  valid  contract.     These  requisites 
■will  be  considered  under  the  following  heads; 

(a)  Competency  of  parties  (p.  10). 

(b)  Consideration  ^p.  17). 

(c)  Formalities  (p.  20). 

(d)  Subject-matter  (p.  23). 

(e)  Intention  to  be  partners  (p.  30). 

Part7\e)\'^hip  Created  Only  hxj  Contract. 

It  results  from  the  definition  of  a  partnership,  as  the  relation  ex- 
isting between  persons  who  have  so  agreed  that  the  profits  of  a  busi 
ness  to  be  carried  on  by  one  or  more  of  them  for  all  of  tliem  enure 
to  them  all  as  co-owners,  that  a  partnership  can  be  created  only 
by  cuutract.     A  partnership  is  never  created  by  operation  of  law.^* 

«*  Soe  post,  p.  50.  2  5  Soc  post,  p.  30. 

»•  Bates,  Partn.  §  3;  T.  Pars.  Partn.  §  G;  Story,  Partn.  §  3.  The  joint  prosecution 
of  lawsuit  does  not  create  a  partnerstiip  between  the  parties  as  to  the  subject-mat- 
ter in  dispute.  As  to  the  parties  themselves,  the  partnership  cannot  be  formed  by 
implication  or  operation  of  law.  Wilson's  Ex'rs  v.  Cobb's  Ex'rs,  28  N.  J.  Eq.  177. 
A  partnership  is  not  established  between  a  husband  and  wife  by  the  mere  fact 
that   they    purchase   property   jointly.      Ingals    v.    Ferguson,    59   Mo.    App.   299, 


10  DEFINITION    AXD    ESl ABLISHMENT    Of-  RELATION.  (Ch     1 

When  it  exists  it  is  always  as  the  result  of  an  express  or  implied 
agreement  to  be  partners,  or  to  do  acts,  which  agreement  the  law  de- 
clares constitutes  a  partnership.  Tlius,  where  a  father  and  his  sons 
conducted  a  business  without  any  agreement  between  them,  the  sons 
drawing  no  salary,  and  having  merely  an  exi)ectation  of  ultimate 
succession,  no  partnership  exists.'^  So.  where  persons  living  to- 
gether as  husband  and  wife  accumulate  property,  on  the  death  of 
the  man  the  woman  is  not  entitled  to  the  property  as  surviving  part- 
ner, as  against  a  former  wife." 

COMPETENCY  OF  PARTIES. 

4.  Parties  competent  to  enter  into  ordinary  contracts  are 
competent  to  form  a  partnership.  This  -will  be  con- 
sidered with  reference  to 

(a)  Aliens  (p.   11). 

(b)  Felons  (p.  11). 

(c)  Infants  (p.   11). 

.  (d)  Lunatics  (p.   \-\). 

(e)  Married  women  (^p.  14). 

(f)  Corporations  (p.  15). 

(g)  Number  of  persons  who  may  become  members  of  one 

partnership  (p.  IG). 

Considering  the  agreement  first  with  reference  to  Its  parties,  it  is 
to  be  remarked  that  these  parties,  just  like  the  parties  to  any  other 

When  funds  invested  in  a  partnership  business  by  the  wife  arc  (.ornmuuity  proiHTty. 
the  husband  becomes  a  parUuT  in  the  business.  Iloujjhton  v.  I'uryear  (Tex.  Civ. 
App.)  3U  S.  W.  583. 

27  Phillips  V.  Phillips,  49  III.  437.  Partnership  can  only  exist  as  between  the 
parties  themselves,  in  pursuance  of  an  express  or  implied  agreement  to  which  tho 
minds  of  the  parties  have  assented.  The  intention  or  even  belief  of  one  party 
alone  cannot  create  a  partnership  without  the  assent  of  the  other.  Id.  Cf.  Ilat- 
zer  V.  Ilatzer,  28  N.  J.  Eq.  130,  where  the  facts  were  very  similar  to  the  abov.- 
case,  but  where  a  partnership  was  decreed  to  have  existed  between  the  parties. 
See,  also,  Farr  v.  Wheeler,  20  N.  II.  569;  Wilson's  Ex'rs  v.  Cobb's  Ex'rs,  28  N.  J. 
Eq.  177;  Estate  of  Winters.  1  Myr.  Prob.  (Cal.)  131;  In  re  Gibb's  Estate,  157 
Pa.  St.  59,  27  Atl.  383. 

«8  Winters'  Estate,  1  Myr.  Prob.  (Cal.)  131. 


§    4)  COMPETENCY    OF    PARTIES.  11 

contract,  must  have  been  able  to  contract  if  they  are  to  be  held  to 
be  the  partners  of  each  other.  Who  can  be  a  member  of  a  partner- 
ship depends  on  what  power  the  individual  has  at  law  to  consent  so 
as  to  bind  himself.  The  law  imposes  restrictions  upon  individuals 
in  respect  of  their  entering  into  contracts,  or  allows  them  to  plead 
disabilities  when  they  are  sought  to  be  held  bound  by  contracts,  only 
in  the  cases  of  certain  classes  of  persons.  The  want  of  ability  or 
capacity  of  persons  to  contract,  so  as  to  become  members  of  partner- 
ships, is  to  be  considered  according  as  such  persons  may  be  within 
the  accepted  classifications  of  (1)  aliens,  (2)  felons,  (3)  infants,  (4) 
lunatics,  (o)  married  women,  and  (6)  corporations.  All  persons  other 
than  those  thus  enumerated  may  participate  in  the  relation. 

Aliens. 

It  is  said  that  no  disability  attaches  to  aliens  as  parties  contracting 
for  the  partnership  relation,  so  long  as  they  are  not  alien  enemies. 
An  alien  not  bearing  the  chaiaeter  of  an  alien  enemy  is,  in  other 
words,  eligible  as  a  partner."  But  hostilities  between  the  United 
States  and  another  country  render  a  voluntary  resident  of  that  other 
country  ineligible  as  a  member  of  a  partnership  here."*  Indeed,  an 
existing  partnership  in  the  United  States  composed  of  individuals, 
any  one  of  whom  is  voluntarily  resident  of  another  country,  is  ipso 
facto  dissolved  by  the  inauguration  of  hostilities  between  that  coun- 
try and  this.'* 

Felons. 

Felons  probably  do  not,  in  the  absence  of  statutory  restrictions, 
labor  under  any  disability  to  contract  in  this  country;  and  hence, 
unless  so  restricted,  they  may  be  members  of  a  partnership. 

Infants. 

An  infant  may  become  a  partner,"  but,  notwithstanding  his  becom- 
ing so,  he  incurs  no  liability  during  his  minority,  and  is  responsible 

«•  Bates,  Partn.  §§  110,  131;    Story,  Partn.  §  9. 

»o  McConnell  v.  Hector,  3  Bos.  &.  P.  113;  Evans  t.  Richardson,  3  Mer.  4G9; 
Brandon  v.  Nesbitt,  6  Term  R.  23;  McAdams  v.  Hawes,  9  Bush.  (Ky.)  15. 
See  Griswold  v.  Waddington,  15  Johns.  (N.  Y.)  57. 

«i  See  post,  p.  402;    Griswold  v.  Waddington,  15  Johns.  (N.  Y.)  57. 

•  »  Goode  T.  Harrison,  5  Barn.  &  Aid.  147;  Duuton  v.  Brown,  31  Mich.  182; 
Osburn  t.  Farr,  42  Mich.  134,  3  N.  W.  299;    Whitney  v.  Dutch,  14  Mass.  457; 


12  DEFINITION    AND    ESTABLISHMENT    OK    RELATION.  (Cll.    1 

for  no  debts,  but  may,  before  coming  of  age  or  within  a  reasonable 
time  thereafter,  disaffirm  all  the  partnership  transactions,"  even  to 
the  prejudice  of  a  stranger  trading  with  the  firm  having  no  notice  of 
his  minority.  This  disaffirmance,  however,  must  be  made  within 
a  reasonable  time  after  his  reaching  full  age,  or  before  his  reaching 
it  at  all.**  What  is  such  reasonable  time  depends  on  the  facts  in- 
volved in  each  particuhir  case.  The  right  to  repudiate  the  partner- 
ship, however,  is  the  privilege  of  the  infant."  The  adult  partnere 
are  bound.  An  infant  is  not  liable  for  the  torts  of  his  agent,  and  it 
follows  that  he  is  not  liable  for  the  misconduct  of  his  fellow  part- 
ner." 

Penn  v.  Whitchond.  17  Grat.  (Va.)  ."tOS;  Bush  t.  Llnthiniin.  rSO  Md.  344:  Adamn 
T.  Beall,  67  Md.  W.  8  All.  604.  A  minor  may  bocouie  a  K<iuTal  partner  under 
the  Innitcd  partnership  act.  Continental  Nat.  Bank  of  Boston  t.  Strauss,  137 
N.  Y.   14M.  32  .\.  E.  KKW. 

»"  Vinaen  t,  Lockard,  7  Bush  (Ky.»  4TtH;  Neal  v.  Berry.  80  Me.  193.  29  Atl. 
987;  Ex  parte  Taylor,  8  De  Gcx,  M.  &  G.  254;  Bush  ▼.  Liiithieum,  59  Md.  344; 
Bixier  ▼.  KreHK«'.  109  Pa.  St.  40.'5.  32  Atl.  414;  Mehlhoi)  t.  ILtie,  00  Iowa.  30,  57 
N.  W.  O.'iO;  Lindl.  Pnrtn.  74.  An  infant  partner  ought  not  to  be  joined  as  a 
defendant  in  an  action  asainst  the  firm.  Chantlier  t.  Parkfs,  3  E»p.  70;  JafTrny 
T.  Frebain.  5  Esp.  47;  Giblm  t.  Merrill.  3  Taunt.  :<"7;  l'.'!'-e.-«  v.  M.  rriii  -» 
Taunt.  4(W. 

84  Jenkins  v.  Jenkins.  12  Iowa.  195;  IJreen  t.  WiUlinj;.  09  Iowa,  079,  13  N. 
W.  701;  Harlnian  v.  Kendall.  4  Ind.  403;  Kline  ▼.  Beebe,  6  Conn.  494;  Good- 
now  V.  Lumber  Co.,  31  Minn.  408,  18  N.  W.  283.  An  Infant  partner  may,  before 
coming  of  age  (Murphy  t.  Johnsun,  45  Iowa.  57;  Chiids  t.  Dobbins,  5.')  Iowa, 
20.'),  7  N.  W.  490;  Adams  t.  Beall,  07  Md.  .')3,  8  Atl.  OOJ;  Folds  v.  Aliar.lt,  35 
Minn.  488,  20  N.  W.  201;  Shirk  ▼.  Shultz,  113  Ind.  571,  15  N.  E,  12;  contra, 
Dunton  v.  Brown,  31  Mich.  182),  or  within  a  reasonable  time  thereafter  (Dunton 
T.  Brown,  supra)  disaflirm  all  the  partnership  transactions,  even  to  the  prejudice 
of  a  stranger  trading  with  the  firm,  having  no  notice  of  his  minority;  Lindl. 
Partn.  74;  Vinsen  v.  Lockard,  7  Bush  (Ky.)  458.  A  person  who,  before  he 
comes  of  age,  represents  himself  as  a  partner,  must,  when  he  comes  of  age,  take 
care  to  notify  tliat  he  has  c(osed  to  be  a  partner  if  he  wishes  to  avoid  liability. 
Lindl.  Partn.  70;   Goode  v.  Harrison,  5  Barn.  &  Aid.  147. 

8  6  Stein  V.  Robertson,  30  Ala.  280.  See  Brown  v.  Insurance  Co.,  117  Mass. 
470;  Hastings  v.  Dollarhide,  24  Cal.  195.  An  infant,  in  order  to  escape  lia- 
bility upon  his  contract  of  partnership,  must  set  up  his  infancy;  otherwise,  the 
co-partner  may  demand  that  the  property  of  the  firm  be  devoted  to  the  payment 
of  partnership  debts,  and  that  each  partner  shall  contribute  pro  rata  to  the  pay- 
ment of  the  excess  of  the  debt  after  to  devoting  such  proi)erty.  Whittemore  v. 
Elliott,  7  Hun  (N.  Y.)  518.  •«  Lindl.  Partn.  75. 


§4)  COMPETENCY    OF    PARTIES.  18 

An  infant  cannot  invoke  his  minority  as  a  shield  in  a  case  where  he 
has  deliberately  attempted  to  defraud  by  misstating  his  age.^^  An- 
other check  upon  a  designing  infant  partner  is  that,  by  refusing  to 
participate  in  the  losses  of  his  firm,  he  waives  the  right  to  share  in 
its  profits."  He  can,  by  a  timely  disailirmance,  as  above  stated, 
avoid  a  contract  he  has  made.  Besides  this,  he  can,  if  it  has  not 
benefited  him  in  any  way,  recover  back  whatsoever  money  he  may 
have  paid  under  it,  but  not  if  he  has  been  benefited,  unless  he  can 
put  the  party  contracting  with  him  in  a  position  as  if  no  contract  had 
ever  been  made.** 

•T  At  common  law,  his  infancy  la  a  defease  to  an  action  on  the  contract,  but  not 
to  an  action  on  the  caie  for  deceit.  Vinsen  v.  Lockard,  7  Bush  (Ky.)  458;  Clark. 
Cont.  'Jiil.  "In  equity,  where  the  infant  has  falsely  represented  that  he  was  of 
age,  or  tJiken  active  steps  to  conceal  his  age,  or  been  otherwise  guilty  of  fraud,  and 
has  thereby  induced  the  other  party  to  enter  into  the  contract,  his  fraud  will  estop 
him  from  pleading  his  infancy  to  the  other's  prejudice."  Id.  Where  tlie  contnut 
was  induced  by  fraud  of  tlie  infant,  the  adult  partner  may  rescind  or  dissolve  it. 
Bush  V.  Linthicum,  5'J  Md.  344;  Lenipriere  v.  Lange,  12  Ch.  Dlv.  675.  In  Burgess 
V.  Merrill,  4  Taunt.  4US,  4Cy,  Chief  Justice  Mansfield  says:  "If  an  infant  forms  a 
partnership  with  an  adult,  he  holds  himself  forth  to  the  world  as  not  being  an  infant; 
he  practices  a  fraud  on  the  world."  Approved  in  Kemp  v.  Cook,  18  Md.  130.  But 
this  is  not  law.     Lindl.   Partn.  74;    Bates,  Partn.  142.     See  Glossop  v.  Colman. 

1  Starkie,  lii>;    CTncn  v.  Creeiibank.  -  Marsh.  C.  1'.  485. 

•  •An  infant  cannot,  as  against  his  co-partners,  insist  that,  in  taking  the  part- 
nership accounts,  he  shall  ho  credited  with  profits,  and  not  be  debited  with  losses. 
The  infant  partner  must  either  repudiate  or  abide  by  the  agreement  under  which 
alone  ho  is  entitled  to  any  share  of  the  profits.      Lindl.  Partn.  75;    Miller  v.  Sims, 

2  Hill  (S.  C.)  479;  Dana  v.  Stearns.  3  Cush.  (Mass.)  372.  An  infant  may  avoid 
personal  liability  by  disaffirming  a  contract  made  by  a  firm  of  which  he  was  a 
member,  without  disallirming  the  contract  of  partnership.  Mehlhop  v.  Rae,  90 
Iowa,  30,  57  N.  W.  050.  Contra,  Miller  v.  Sims.  2  Hill  (S.  C.)  479.  Though 
an  infant  may  rescind  on  account  of  his  infancy,  the  firm  creditors  have  a  prior 
right  in  the  firm  property.  Yates  v.  Lyon.  CI  N.  Y.  344;  Pelletier  v.  Couture, 
148  Mass.  2C9,  19  N.  E.  400:  Shirk  v.  Shultz,  113  Ind.  571,  15  N.  E.  12;  Lovell 
v.  Beauchamp  [189-1]  App.  Gas.  607;    Moley  v.  Brine,  120  Mass.  324. 

»»  Lindl.  Partn.  75.  But  see  Clark,  Cont.  254.  In  Page  v.  Morse,  128  Mass. 
09,  it  was  held  that  if  an  infant  becomes  a  partner  with  another,  and  puts  a  sum 
of  money  into  the  business,  he  cannot  afterwards,  by  rescinding  the  contract, 
recover  of  his  partner  the  money  so  paid,  or  for  labor  performed,  in  the  absence  of 
an  express  promise  to  pay  him  therefor.  See,  also,  Moley  v.  Brine,  120  Mass.  324. 
Cf.  Sparman  v.  Keim,  83  N.  Y.  245.  And  set  Adams  v.  Beall,  67  Md.  53,  8  Atl. 
«04. 


14  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.   1 

lAinatlC9. 

As  to  lunatics,  the  law  of  contracts  protects  persons  contracting 
with  them  in  ignorance  of  their  mental  condition,  when  the  contract 
has  been  actually  executed.  It  may  be  said  that  a  lunatic  may  be  a 
partner  legally  in  some  conceivable  cases.  At  the  same  time,  it  is 
well  to  be  mindful  of  the  fact  that  all  transactions  with  him  with 
knowledge  of  his  condition  may  be  subsequently  impeached.*"  The 
fact  of  lunacy  of  a  partner  developed  during  the  cun'ency  of  the  part- 
nership does  not  dissolve  the  latter  ipso  facto;  but,  on  the  contrary, 
he  is  entitled  to  a  share  of  the  profits  made  by  the  other  partners 
subsequently.  Moreover,  he  is  liable  for  the  subsequent  misconduct 
of  his  fellow  partners.*^ 
Married  Woinen. 

At  common  law  a  feme  covert  could  make  no  valid  contracts, 
whether  with  her  husband  or  any  person  else.  Tlierefore  she  could 
not  become  a  party  to  any  valid  agreement  to  form  a  partnership 
relation.*^  The  removal  of  the  disability  of  a  mairied  woman  to 
be  such  a  party  has  been  effected,  where  Ihe  disability  has  been  re- 
moved at  all,  through  express  legal  enactment,  so  that  what  her  situ- 
ation is  in  this  regard  depends  on  the  statutes  prevailing  in  the  place 
where  the  contract  is  attempted  to  be  entered  into.  The  effect  of 
these  laws  is  in  some  of  the  states  to  allow  her  to  become  a  party 
to  a  partnership  agreement  generally,  while  in  others  she  is  limited 
to  such  agreements  as  concern  a  partnership  relation  in  which  her 
husband  does  not  participate.*' 
Same — May  Iliishand  and   Wife  Become  Cv-partners  in  Businessf 

The  weight  of  authority  goes  to  show  that  husband  and  wife  may 
not  be  members  of  the  one  partnership,  the  decisions,  as  a  rule,  being 

<o  Lindl.  Part.  7G;  Fay  v.  Burditt,  81  Ind.  433;  Behrens  v.  McKenzie,  23  Iowa, 
333;    Clark,  Cont  p.  203. 

<i  Story,  Partn.  §§  2tX>-21>7;  Raymond  v.  Vaughan,  17  lU.  App.  144;  Reynold! 
T.  Austin,  4  Del.  Ch.  24.  See,  also,  Davis  v.  Lane,  10  N.  H.  ItJl;  Isler  v.  Baker, 
6  Humph.  (Tcnn.)  85;    Griswold  v.  Waddington,  15  Johns.  (N.  Y.)  57. 

42  Except  in  case  of  abandonment,  separation,  alienage  of  husband,  conviction 
of  husband  of  felony,  etc.,  or  where  she  had  a  separate  estate.  See  Lindl.  Partn, 
p.  77. 

<8  Silveus'  Ex'rs  v.  Porter,  74  Pa.  St.  448;  Dupuy  v.  Sheak.  57  Iowa.  361,  10 
N.  W.  731;  Newman  v.  Morris,  52  Miss.  402;  Vail  v.  VVinterstein,  l>4  Mich.  230, 
53  N.  W.  032.     But  see  Vanuerson  ?.  Cheatham,  41  S.  C.  327,  19  S.  E.  014. 


§    *!)  COMPETENCY    OF    PARTIES.  15 

against  it,  even  in  the  states  where  the  laws  are  most  liberal  in  re- 
spect of  the  right  of  a  feme  covert  to  bind  herself  by  contract.** 
The  incapacity  is  not  one  that  concerns  the  wife  only,  and  hence  it 
remains  notwithstanding  such  laws,  unless,  indeed,  they  expressly 
declare  that  the  husband  and  wife  may  contract  with  each  other 
generally.  The  disability  is  one  entirely  outside  of  the  common-law 
doctrine  of  a  feme  covert  not  being  sui  juris,  and  therefore  is  not  re- 
moved by  statutes  intended  merely  to  change  the  common  law  in 
that  respect.  The  point  upon  which  the  disability  rests  in  the  legal 
status  of  husband  and  wife,  who,  in  contemplation  of  law,  are  one 
person,  no  individual  being  able  to  contract  with  himself. 

Corporations. 

Corporations,  being  restricted  by  the  provisions  of  their  charters 
or  constitutions  to  the  employment  of  their  funds  for  only  specified 
purposes,  are  prima  facie  ineligible  as  members  of  a  partnership.*" 

**  Knowles  t.  Hull,  99  Mass.  562;  Bowker  v.  Bradford,  140  Mass.  521,  5  N. 
B.  480;  Plumer  t.  Lord,  5  Allen  (Mass.)  4G0;  Lord  v.  Parker,  3  Allen  (Mass.) 
127;  Haas  v.  Shaw,  91  Ind.  384;  Scarlett  v.  Suodgrass,  92  Ind.  2(52;  Payne  v. 
Thompson,  44  Ohio  St.  192,  5  N.  E.  G54;  Artman  v.  Ferguson,  73  Mich.  146,  40 
N.  W.  907;  Bernard  &  Leas  Mauufg  Co.  v.  Packard  &  Calvin,  12  C.  C.  A.  123, 
64  Fed.  309;  Miller  v.  Marx,  6,^.  Tex.  131;  Cox  v.  Miller,  54  Tex.  16;  Brown 
T.  Chancellor,  61  Tex.  445;  Smith  v.  Bailey,  66  Tex.  553,  1  S.  W.  627;  Carey  v. 
Burruss,  20  W.  Va.  571;  Mayer  v.  Soyster,  30  Md.  402;  Hamilton  v.  Hamilton, 
89  111.  301;  Hoker  v.  Boggs,  63  111.  161.  But  see  Dressel  v.  Lonsdale,  46  111. 
App.  454.  In  Re  Kinkead,  3  Biss.  40G,  Fed.  Cas.  No.  7,824,  Blodgett,  J.,  in  the 
United  States  district  court,  holds  otherwise.  Knott  ▼.  Knott,  6  Or.  150;  Frank 
V.  Anderson,  13  Lea  (Tenn.)  695.  See  Theus  v.  Dugger,  93  Tenn.  41,  23  S.  W. 
135;  Gilkerson-Sloss  Commission  Co.  v.  Salinger,  56  Ark.  294,  19  S.  W.  747.  In 
Wisconsin  the  question  is  doubtful.  See  HornefiEer  v.  Duress,  13  Wis,  603;  Duress 
V.  Horneffer,  15  Wis.  195.  But  see  Fuller  &  l^iUer  Co.  v.  McHenry,  83  Wis. 
573,  53  N.  W.  896.  In  New  York  the  question  is  in  confusion.  In  Suau  v.  Caffe, 
122  N.  Y.  308,  25  N.  E.  488,  it  is  held  that  she  can,  but  the  case  seems  to  stand 
alone  in  that  state.  Three  judges  dissented.  Board  of  Trade  of  City  of  Seattle 
T.  Hayden,  4  Wash.  263,  30  Pac.  87,  and  32  Pac.  224.  Contra,  Louisville  & 
N.  R.  Co.  T.  Alexander  (Ky.)  27  S.  W.  981;  Lane  v.  Bishop,  65  Vt.  575,  27 
Atl.  499. 

45  People  V.  North  River  Sugar-Refining  Co.,  121  N.  Y.  582,  24  N.  E.  834; 
New  York  &  S.  Canal  Co.  v.  Fulton  Bank,  7  Wend.  (N.  Y.)  412;  Catskill  Bank  v. 
Gray,  14  Barb.  (N.  Y.)  471;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa. 
St.  173;  Whittenton  Mills  v.  Upton,  10  Gray  (Mass.)  582;  Hackett  v.  Railroad 
Co.,  12  Or.  124,  6  Pac.  659;   Burke  v.  Railroad  Corp.,  8  Am.  &  Eng.  R.  Cas.  552; 


16  DEFINITION    AND    ESTABLISHMENT    OK    RELATION.  (Ch.    1 

Number  of  Persons  Who  may  Become  Members  of  One  Partnership. 

Any  limitation  upon  the  number  of  individuals  who  may  contract  to 
foiTO  a  co-partnership  must,  of  necessity,  be  effected  by  statute.  In 
Lngland  no  more  than  10  persons  may  engage  as  partners  in  banking, 
and  not  more  than  20  in  any  other  kind  of  business  for  profit.*' 

Partnerships  hetween  Firms. 

There  would  seem  to  be  no  legal  diflSculty  in  the  way  of  treating  two 
firm^  as  individual  partners  in  a  conjoint  firm,  if  such  be  the  obvious 
intention  of  the  parties.  So,  also,  there  may  be  a  partnership  between 
I  firm  and  an  indi\idual.*' 

llallory  t.  Oil-Works,  815  Tenn.  508,  8  S.  W.  396.  See,  also,  Racine  &  M.  R. 
Oo.  v.  Farmers'  Loan  &  Trust  Co.,  49  111.  331;  Bissell  v.  Railroad  Co.,  22  N.  Y. 
258  (cf.  Gunn  v.  Railroad  Co.,  74  Ga.  5()()»;  French  t.  Donohue,  29  Minn.  111. 
12  N.  W  354;  Marine  Bank  v.  Ogden,  29  111.  248.  It  is  not  within  the  power 
of  a  buaiijess  corporation  to  enter  into  a  partnership,  and  a  purchase  of  an  in- 
terest in  a  partnership  by  such  corporation  docs  not  constitute  it  a  partner 
Aurora  State  Bank  v.  Oliver,  G2  Mo.  App.  390.  In  Butler  v.  Toy  Co.,  46  Conn. 
I3G,  it  was  hold  that  the  charter  of  defendant  authorized  it  to  enter  into  a 
partnership  with  a   firm. 

"A  corporation  may,  in  furtherance  of  the  object  of  its  creation,  contract  with 
an  individual,  though  the  effect  of  the  contract  may  be  to  impose  upon  the  com- 
pany the  liability  of  a  partner.  And  as  to  third  persons,  the  liability  of  a  part- 
ner is  frt'iiuently  iinposi'd,  though  it  was  not  the  intention  of  the  party  sought 
to  be  charged  to  become  one;  and  even  though  a  partnership  could  not  have  been 
made."     Cleveland  Paper  Co.  v.  Courier  Co.,  67  Mich.  152,  34  N.  W.  556. 

<«  25  &  26  Vict.  c.  89,  §  4.  As  to  this  point  in  America,  see  laws  of  the  sev- 
eral states. 

«T  In  re  Hamilton,  1  Fed.  800;  Raymond  v.  Putnam,  44  N.  IT.  IGO;  Bullock 
V.  Hubbard.  23  Cal.  400;  Moador  ▼.  Hughes,  14  Bush  (Ky.)  652.  A  partnership 
between  individuals  and  a  second  partnership  constitutes  all  members  of  the 
Bfcond  partnership  members  of  the  first.  Meyer  v.  Krohn,  114  111.  574,  2  N.  E 
495. 


§    5)  CONSIDEKATION.  17 


CONSIDERATION. 

6.  A   partnership   agreement,   like   other   contracts,    must 
have  a  consideration  to  support  it. 

Agreements  to  share  profits,  like  all  other  agreements,  require  to 
be  founded  on  some  consideration  in  order  to  be  binding.**  Any  con- 
tribution in  the  shape  of  capital  or  labor,  or  any  act  which  may  result 
in  liability  to  third  parties,  is  a  suflQcient  consideration  to  support  such 
an  agi'eement.*"  A  bona  fide  contract  of  partnership  is  not  invalidat- 
ed by  the  unequal  value  of  the  contributions  of  its  members,  for  they 
must  be  their  own  judges  of  the  adequacy  of  the  consideration  of  the 
agreement  into  which  they  enter.  As  observed  by  Vice  Chancellor 
Wigram:'"  "If  one  man  has  skill  and  wants  capital  to  make  that  skill 
available,  and  another  has  capital  and  wants  skill,  and  the  two  agree 
that  the  one  shall  pro\nde  capital  and  the  other  skill,  it  is  perfectly 
clear  that  there  is  a  good  consideration  for  the  agreement  on  both  sides, 
and  it  is  impossible  for  the  court  to  measure  the  quantum  of  value. 
The  parties  must  decide  that  for  themselves." 

Profits  to  he  Shared,  but  Losses  not. 

"It  often  happens  that  persons  agree  that  all  profits  shall  be  shared 
ratably,  and,  nevertheless,  that  all  losses  shall  be  borne  by  some  one  of 
them  exclusively.      Such  an  agreement  is  not  necessarily  invalid  as  a 

«8  A  partnership  agreement  without  mutuality  is  void.  Thus,  an  agreement 
of  partnership  between  two  persons,  by  which  one,  without  furnishing  any  means 
or  doing  anything  to  further  the  common  enterprise,  is  to  share  equally  in  t!iJ 
profits  and  property  acquired,  is  without  mutuality,  founded  on  no  consideration, 
and  void.  Mitchell  v.  O'Neale,  4  Nev.  504.  See,  also,  Frothingham  v.  Seymour, 
118  Mass.  489;  Alabama  Fertilizer  Co.  v.  Reynolds,  79  Ala.  497;  Dale  v,  Hamil- 
ton, 5  Hare,  393;    Kimmina  v.  Wilson,  8  W.  Va.  584. 

*»  Lindl.  Partn.  p.  63.  Allowing  the  use  of  one's  name  is  a  sufficient  consid- 
eration. McCord  v.  Field,  27  U.  C.  C.  P.  391.  See  Coleman  t.  Eyre,  45  N.  Y. 
88;  Breslin  v.  Brown,  24  Ohio  St.  565;  Belcher  v.  Conner,  1  S.  C.  88.  A  prom- 
ise to  account  for  one-half  of  the  profits  of  a  trading  venture  is  supported  by  a 
promise  to  share  one-half  of  the  losses.  It  is  a  clear  case  of  mutual  promises, 
and  the  obligation  of  each  party  is  a  good  consideration  for  that  of  the  other. 
Such  an  agreement  is  not  within  the  clause  of  the  statute  of  frauds  requiring 
agreements  for  the  sale  of  goods  to  be  in  writing.     Coleman  t.  Eyre,  45  N.  Y.  38. 

BO  Dale  ▼.  Hamilton,  5  Hare,  393. 
GEO.PART.— 2 


18  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

nudum  pactum;  for  it  is  nothing  more  than  an  agreement,  pronding 
among  other  things,  that  some  or  one  of  the  partners  shall  indemnify 
the  others  against  losses;  and  the  very  fact  that  these  latter  become, 
or  agree  to  become,  partners,  is  quite  suflBcient  consideration  to  give 
validity  to  a  contract  that  they  shall  be  indemnified.  Such  agree- 
ments appear,  moreover,  to  be  reasonable,  where  the  partners  indemni- 
fied leave  the  whole  management  of  the  concern  to  their  co  part- 
ners." "* 

Premiums. 

It  frequently  happens,  when  one  person  is  admitted  into  partner- 
ship with  another  already  established  in  business,  that  it  is  agreed 
that  the  incoming  partner  shall  pay  the  other  a  premium ;  i.  e.  a  sum 
of  money  for  his  own  private  benefit.  Such  an  agreement  is  valid; 
and,  if  the  premium  is  not  duly  paid,  it  may  be  recovered  by  an  action, 
provided  the  plaintiff  has  been  ready  and  willing  to  take  the  defendant 
Into  partnership,  as  agreed."  The  consideration  for  the  prtmium  is 
not  only  the  creation  of  a  partnership  between  the  person  who  takes 
and  him  who  parts  with  the  money,  but  also  the  continuance  of  that 
partnership;  and  if  a  person,  on  his  entry  into  a  partni-rship,  pays  a 
premium,  and  then  the  partnership  is  determined  sooner  than  was  ex- 
pected, the  question  arises  whether  any,  and,  if  any,  what  part,  of  the 
premium  ought  to  be  returned.'*  In  order  to  determine  this  point,  it 
is  necessary,  in  the  firet  place,  to  ascertain  whether  the  agreement  for 
the  premium  was  or  was  not  tainted  with  fraud. 

Premiums  Returnable  in  Cases  of  Fraud. 

If  a  person  has  been  deluded  into  becoming  a  partner  by  false  and 
fraudulent  representations,  and  has  paid  a  premium,  he  may  take  one 
of  two  courses,  viz.  either  abide  by  the  contract,  and  claim  compensa- 
tion for  the  loss  occasioned  by  the  fraud,  which  he  may  do  in  taking 
the  partnership  accounts,  or  he  may  disaffirm  the  contract,  and  there- 
by entitle  himself  to  a  return  of  the  whole  of  the  money  he  has  paid 

01  Lindl.  Partn.  p.  68;  Geddes  v.  Wallace,  2  Bligh,  270.  But  Bee.  contra. 
Brophy  v.  Holmes.  2  Moll.  1. 

B2  Liudl.  Partn.  p.  64;  Walker  ▼.  Harris,  1  Anstr.  245.  See,  also,  post,  p.  298, 
"Actious  between  Partners." 

88  See  Pol.  Partn.  art.  59;  Edmonds  v.  Robinson,  29  Ch.  Div.  170.  See,  also, 
Smith  V.  Everett,  126  Mass.  304;  Tournade  v.  Hagedorn,  5  Thoinp.  &  C.  (N.  Y.) 
288;    Capen  ▼,  Barrows,  1  Gray  (Mass.)  376. 


§    5)  CONSIDERATION.  19 

And  in  a  case  of  this  sort,  in  the  event  of  the  bankruptcy  of  the  de- 
frauding partner,  the  amount  of  the  premium  paid  to  him  is  a  debt 
provable  against  his  estate,  in  competition  with  his  separate  cred- 
itors." 

Return  of  Premium  Where  the  Consideration  for  It  has  Failed. 

But  if  the  agreement  by  virtue  of  which  the  partnership  was  enteied 
into,  and  the  premium  became  payable,  is  not  tainted  by  fraud,  then 
the  proper  mode  of  dealing  with  the  premium  is  not  so  easy  to  deter- 
mine. In  the  first  place,  assuming  the  partnership  to  have  been  in 
fact  created,  it  is  clear  that  there  has  not  been  a  total  failure  of  con- 
sideration for  the  premium,  and,  consequently,  it  cannot  be  recovered 
as  money  paid  for  a  consideration  which  has  failed."  In  the  next 
place,  persons  who  enter  into  partnership  know  that  it  may  be  deter- 
mined at  any  time  by  death  and  other  events;  and,  unless  they  provide 
against  such  contingencies,  they  may  fairly  be  considered  as  content 
to  take  the  chance  of  their  happening,  and  the  tendency  of  modern  de- 
cisions is  to  act  on  this  principle." 

Apportionment  of  Premvwm  W7ien  Partnership   Ceases  Sooner  Than 

was  Expected. 

On  the  other  hand,  if  a  person  receives  a  premium  for  taking  anoth- 
er into  partnership,  which  is  to  endure  for  a  certain  time,  and  then 
himself  does  anything  which  determines  the  partnership  before  that 
time  has  elapsed,  he  may  be  fairly  considered  as  having  precluded  him- 
self from  insisting  on  his  strict  right  to  retain  or  be  paid  his  whole 
premium.'^      Moreover,  where  there  has  been  no  misconduct,  a  pre- 

B*  Lindl.   Partn.  p.  64. 

BO  See  Taylor  v.  Hare,  1  Bos.  &  P.  (N.  R.)  260. 

ee  Whiucup  v.  Hughes,  L.  R.  6  C.  P.  78;  Ferns  t.  Carr,  28  Ch.  Div.  409;  Farr 
V.  Pearce,  3  Madd.  74.  But  not  bo  where  the  probability  of  death  within  a  short 
time  was  known,  and  not  disclosed,  Mackcnna  v.  Ptirkes,  36  Law  J.  Ch.  306,  15 
Wkly.  Rep.  217,  or  where  there  is  any  other  fraud,  Hamil  v.  Stokes,  4  Price,  161. 
Termination  by  bankruptcy:  Cf.  Akhurst  v.  Jackson,  1  Swanst.  Ch.  85,  with 
Freeland  v.  Stansfeld,  2  Smale  &  G.  479. 

6T  Lindl.  Partn.  p.  65.  See,  also,  Richards  v.  Todd,  127  Mass.  167;  Boughner 
T.  Black's  Adm'r,  83  Ky.  521;  Hamil  t.  Stokes,  4  Price,  161;  Freeland  v. 
Stansfeld,  2  Smale  &  (i.  479;  Jauncey  v.  Knowles,  29  Law  J.  Ch.  95;  Mycock 
V.  Beatson,  13  Ch.  Div.  384.  Where  the  dissolution  is  from  the  fault  of  the  one 
who  paid  the  premium,  it  cannot  be  recovered.  Bluck  v.  Capstick,  12  Ch.  Div. 
863;    Wilson  v.  Johnstone,   L.  R.   16  Eq.  606;    Airey  v.  Borham,  29  Beav.  620. 


20  DEFlpriTIOX    AND    ESTABLL-^HMENT    OF    RELATION.  (Ch.    1 

mimn  paid  for  a  partnership  for  a  term  of  years  has  been  held  appor- 
tionable  in  the  event  of  a  premature  determination  of  the  partnership 
by  an  unforesf^en  occurrence.  The  fact  that  the  consideration  for  the 
premium  has  partially  failed  has  been  considered  suflicient  to  render  it 
inequitable  to  retain  or  obtain  payment  of  the  whole  premium.**  The 
prmciplea  applicable  to  cases  of  this  description  are  not  even  jet  well 
settled,  nor  are  the  decisions  upon  them  easy  to  reconcile. 

FORMALITIES. 

6.  No  particular  formalities  are  essential  to  the  validity  of 
a  contract  of  partnership. 

In  tho  nbs«-nce  of  statute,  no  p«'ctiliar  formalities  are  neccjwary  to 
the  validity  of  a  contract  of  partnership.  Tlic  afxnt'mont  may  be 
either  express  or  implied;  in  writing  or  parol.  In  some  states 
there  are  statutes  requiring  written  agreements  for  all  partner- 
ships, and  in  all  the  states  writing,  and  not  only  that,  but  publi- 
cation also,  and  Rom«'tiines  still  other  formalities,  are  nHjuind  in 
order  to  give  validity  to  what  are  known  as  limited  partnerships.'* 
These  requirements  must  be  strictly  observed,  or  the  paj-tie«  will 
be  liable  as  general  partners. 

Hut  the  fact  that  tJbe  claimant  waa  the  actlre  party  In  procuring  the  dlMoln 
tion  is  imiiiattTial  where  he  haa  good  muse  for  hia  action.  See  Bullock  ?. 
Crockett,  3  (Jiff.  riO";    Atwood  t.  Mnude.  3  Ch.  Ai)p.  3G». 

»•  Where  a  promlum  la  pold  for  admlwion  to  a  partnership  di.iaoluhle  at 
will,  tLere  la  an  Implied  condition  that  It  ahnll  continue  a  reasonable  time;  anti, 
if  the  party  receiving  the  premium  dissolves  Immediately,  he  must  return  the 
premium.  FenthirstonhatiKh  v.  Turner.  25  BcnT.  382;  Hooke  v.  NlBbet.  .'iO  I^w 
J.  Cb.  588,  A  year  has  bet-n  held  a  reasonable  time.  Carlton  t.  Cuniiiiins,  51 
Ind.  478.  See,  also,  Tattersall  ▼.  Groote.  2  Bos.  &  P.  134,  per  Lord  Eldon.  A 
mere  consent  or  agreement  to  dissolve,  which  Is  silent  as  to  the  premium,  leaves 
all  questions  of  this  sort  open,  and  does  not  vary  the  rights  under  the  original 
agreement.  Lindl.  Partn.  p.  OtJ.  Whire  partnership  has  continued  for  a  time, 
the  court  has  a  wide  discretion  as  to  the  amount  to  be  returned.  Lyon  v. 
Tweddell,  17  Ch.  Dlv.  629.  But  it  is  usual  to  apportion  the  premium  with  ref 
ereuce  to  the  agreed  and  actual  diinUion  of  the  pnrtniTship.  See  Pease  v. 
Hewitt,  31  Beav.  22;  Astle  v.  Wright,  23  Beav.  77;  Bury  ▼.  Allen,  1  Colly.  589, 
and  cases  cited  supra.  But  see  Ilamll  v.  Stokes,  Uan.  20,  where  this  rule  was 
not  followed.      See,  generally,  Pol.  Partn.  art.  59.  6o  See  post,  p.    117. 


§    6)  FORMALITIEa.  Jl 

Statute  of  Frauds. 

Where,  however,  the  contract  is  not  to  be  performed  within  a 
year,  it  is  required  by  the  statute  of  frauds  to  be  in  writing,  or 
it  will  be  void.'°  This  enactment  applies  as  well  to  an  ajxreement 
for  a  pai-tnership  to  commence  more  thiin  a  year  from  the  date  of 
the  agreement  "^  as  to  an  agreement  for  a  present  partnership  to 
last  more  than  a  year  from  its  comnu-ncement.'^  But  if  in  either 
case  the  parties  have  acted  on  the  agrtvment,  and  becomes  partners, 
they  must  be  treated  as  such,  and  the  statute  will  not  be  applica- 
ble." 

Sa?ne — Partnerships  in  Land. 

With  respect  to  that  part  of  the  fourth  section  of  the  statute  of 
frauds,  which  relates  to  hinds,  it  is  held  (1)  that  a  partne'-ship  con 
stituted  without  writing  is  as  valid  as  one  constituted  by  writing;'* 
and  (2)  that,  if  a  partm-rship  is  proved  to  exist,  then  it  may  be  shown 
by  parol  evidence  that  its  property  consists  of  hind.'°  This  was 
first  clearly  laid  down  in  Forster  v.  Hale,"  where  a  person  attempted 

•0  The  fourth  sootion  of  the  Btntute  of  frauds  is  as  folIowB:  "That  no  action 
shall  be  brought  whereby  to  charge  •  •  •  any  person  •  •  •  upon  any  con- 
tract or  sale  of  lands,  tt-neiuents  or  hereditaments,  or  any  interest  in  or  concern- 
ing them;  or  upon  any  agreement  that  is  not  to  be  performed  within  the  space 
of  one  year  from  the  making  thereof;  unless  the  agreement  upon  which  such 
action  shall  be  brought,  or  some  numorandum  or  note  thereof,  shall  be  in  writing, 
and  signed  by  the  party  to  be  charged  therewith,  or  some  other  person  thereunto 
by  him  lawfully  authorised." 

«i  Smith  V.  Tarlton.  2  Barb.  Ch.  (.\.  Y.)  330;  Williams  t.  Jones,  5  Barn.  & 
C.  108,  per  Ilulroyd,  J.;  Whipple  v.  Parker,  29  Mich.  3G9.  But  see  Coleman  v. 
Eyre,  45  N.  Y.  38;   IluntUy  v.  Huntley,  114  U.  S.  894,  6  Sup.  Ct.  884. 

0  2  Cases  cited  note  CI;  Britain  v.  Rosslter,  11  Q.  B.  Div.  123;  Mf)rri3  y. 
Peokham.  51  Conn.  128;  Jones  v.  McMichael,  12  Rich.  (S.  C.)  170;  Williams  t. 
Jones.  Tt  Barn.  &  C.  108.  But  se«  McKay  v.  Rutherford,  6  Moore,  P,  C.  414,  13 
Jur.  21;  Jordan  ▼.  Miller,  75  Va.  442;   Smith  v.  Tarlton,  2  Barb.  Ch.  (N.  Y.)  330. 

«8  Baxter  v.  West.  1  Drew.  &  S.  173;  Williams  v.  Williams,  2  Ch.  App.  294; 
Burdon  V.  Barkus.  4  De  Gei,  F.  &  J.  47;  Allison  v.  Perry,  130  111.  9,  22  N.  E. 
492;  Pio  Pico  v.  Cuyas.  47  Cal.  174;  Coward  v.  Clanton,  79  Cal.  23,  21  Pac.  359; 
Gates  V.  Fraser,  6  III.  App.  229.  In  such  case  they  will  be  treated  as  partners 
at  will.      Wahl  v.  Barnum,  110  N.  Y.  87,  22  N.  E.  280. 

6«  Essix   V.  Essex,  20  Beav.  449. 

•'Chester  t.  Dickerson,  54  N.  Y.  1;  Hiohards  v.  Grinnell.  03  Iowa,  44,  18  N. 
W.  008;  Bates  v.  Babcock,  95  Cal.  479,  30  Pac.  005;  Flower  v,  Bamekoflf,  20 
Or.  132,  25  Pac.  370;    Holmes  v.  MtCray,  51  Ind.  358.  «8  5  Ves.  309. 


22  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    I 

to  obtain  an  account  of  the  profits  of  a  colliery,  on  the  ground  that 
it  was  partnership  property;  and  it  was  objected  that  there  waa 
no  signed  writing,  such  as  the  statute  required.  But  to  this  the 
lord  chancellor  observed:  "That  was  not  the  question.  It  wafl 
whether  there  was  a  partnership.  The  subject  being  an  agreement 
for  land,  the  question,  then,  is  whether  there  was  a  resulting  trust 
for  that  partnership,  by  operation  of  law.  The  question  of  partner- 
ship must  be  tried  as  a  fact,  and  as  if  there  was  an  issue  upon  it. 
If,  by  facts  and  circumstances,  it  is  established  as  a  fact  that  these 
persons  were  partners  in  the  colliery,  in  which  land  was  neces.sary 
to  carry  on  the  trade,  the  lease  goes  as  an  incident.  The  partner- 
ship being  established  by  evidence  upon  which  a  partnership  may 
be  found,  the  premises  necessary  for  the  purposes  of  that  partner- 
ship are,  by  operation  of  law.  held  for  the  pur])oses  of  that  piirtner 
ship."  The  principle  here  stated  was  carried  to  its  extreme  limit 
in  Dale  v.  Ilamilton,'^  where  it  was  held  that  an  agreement  to  form 
a  partnership  for  the  purpose  of  buying  and  selling  land  might  bo 
proved  by  parol;  that  it  might  then  be  shown  by  parol;  that  certain 
land  had  been  bought  for  the  purpost^s  of  the  partnership;  and,  con 
sequently,  that  the  plaintiff  was  entitled  to  a  share  of  the  profits 
obtained  by  its  resale."  The  great  weight  of  authority  is  in  ac- 
cord with  these  decisions." 

eT  n  Hare.  300:    s.  c,  on  nrponl.  2  Phil.  Ch.  206. 

««  See,  also,  Cowell  v.  WattB.  2  llnll  &  T.  224.  Llndloy  nnya  (Llndl.  Partn. 
p.  82)  that  this  is  certainly  going  a  long  way  towardB  repealing  the  statute  of 
frauds. 

•»  Fairchild  v.  Fairdiild.  (U  .N.  Y.  471;  Chester  v.  Dickerson.  54  N.  Y.  1;  Snalth 
V.  Tarlton.  2  Barb.  Ch.  (N.  Y.)  ;^:«5:  Alli-son  v.  Perry.  130  111.  ».  22  N.  E.  41)2; 
Carr  t.  I.«ivitt,  54  .Mich.  54(X  20  N.  \V.  57G:  York  t.  Clemens,  41  Iowa.  IKV; 
Richards  v.  Grinncll.  G3  Iowa,  44.  18  N.  VV.  6GS:  Pennybacker  ▼.  Leary.  Ck".  Iowa. 
220,  21  N.  W.  575;  Newell  v.  Cochran,  41  Minn.  374,  43  N.  W.  84;  Sherwood 
T.  Railway  Co..  lil  Minn.  127:  Holmes  v.  McCrnv,  51  Ind.  358;  McElroy  v. 
Swope,  47  Fed.  380;  Bunnel  v.  Taintor's  Adm'r,  4  Conn.  5G8:  Baldwin  v.  John- 
son, 1  N.  J.  Eq.  441;  Personette  v.  Pr>me.  3^4  N.  J.  Bq.  2G;  Brooke  t.  Washing 
ton.  8  CJrnt.  (Va.)  248;  Marsh  v.  Uavis.  33  Kan.  326,  6  Pac,  612.  Contra. 
Smith  V.  Burnham,  3  Sumn.  435.  Fed.  Cas.  No.  13.019;  Kaub  t.  Smith,  61  Mich. 
543,  28  N.  W.  676:  Young  v.  Wheeler,  34  Fed.  1)8;  Everhart's  Appeal,  lOG  Pa. 
St  349;  Ebbert's  Appeal.  70  Pa.  St.  79;  Leferre's  Appeal,  69  Pa.  St.  123; 
Henderson  v.  Hudson.  1  Mnnf.  (Va.)  510.  Cf.  Bird  t.  Morrison.  12  Wis.  153; 
Clarke  t.  McAuIiffe,  81  Wis.  104,  51  N.  W.  83,     "There  can  be   no  doubt  that 


§§    ~-^)  SUBJECT-MATTER.  28 


SUBJECT-MATTEH. 

7.  The  subject-matter  of  a  contract  of  partnership  invaria- 

bly involves  the  prosecution  of  a  business  for  profit. 

8.  A  partnersliip  cannot  be  formed  to  carry  on  a  business 

V7liich  is  unla-wrful  or  opposed  to  public  policy. 

Gain  the  Object  of  Partnership, 

"The  subject-matter  of  every  contract  is  something  which  is  to 
be  done,  or  which  is  to  be  omitted.''  ^^  This  being  so,  it  is  not 
enough  to  say  that  the  subject-matter  of  this  particular  kind  of  a 
contract  is  the  creation  of  a  partnership,  for  the  relation  is  merely 
the  result  of  an  aj^'reement.  It  results  from  the  parties  having 
agreed  to  do  certain  things,  these  things  involving  the  prosecution 
of  a  business  jointly,  and  the  sharing  of  the  profits  and  losses  of 
that  business.  Whatever  the  parties  have  in  contemplation  in  mail- 
ing their  agreement,  as  the  purpose  of  the  latter,  is  the  subject- 
matter  of  the  partnership  agreement.  This  subject-matter,  without 
reference  to  anything  else  that  may  be  part  of  it,  invariably  involves 
the  idea  of  a  business  for  profit."  The  contemplation  of  profits 
inheres  in  the  very  definition  of  a  partnership.^" 

the  prevailing  view  is  the  better  one.  ITie  contract  is  executed  when  the  partner- 
ship relation  is  entcretl  into.  All  that  is  done  after  that  is  done  by  and  for 
the  partnership.  If  land  is  purchased,  it  is  the  land  of  the  partnership,  and  not  of 
the  individual  partners.  In  short,  the  only  action  that  could  be  brought  for  breach 
of  the  contract  would  be  as  action  for  failui*e  to  launch  the  partnership.  Any 
cause  of  action  arising  after  the  partnership  was  formed  would  arise  out  of  the 
partnership  relation."     T.  Pars.  Partn.  (4th  Ed.)  8  0,  note  d. 

TO  1  Pars.  Cont,  48'J. 

Ti  Where  t\NX)  persons  tenants  in  common  of  a  house,  desiring  to  let  the  house, 
agreed  that  one  of  them  should  at  his  own  expense  put  it  In  a  tenantable  condi- 
tion, and  manage  it,  and  that  the  net  rents  should  be  cleared  between  them,  there 
was  no  partnership.  French  v.  Styring,  2  C.  B.  (N.  S.),  at  page  3G0,  per  Wil- 
les,  J.  Sir  Frederick  Pollock,  commenting  on  this  case,  said:  "But  if  they  fur- 
nished the  house  at  their  joint  expense,  and  then  let  portions  of  the  house  as 
lodgings,  they  might  well  be  partners.  Letting  a  house  is  not  a  business,  but 
letting  furnished  rooms  is."  Pol.  Partn.  p.  2.  A  business  is  a  mercantile  enter- 
prise, susceptible  of  profits,  on  one  hand,  and  losses  on  the  other. 

T'  See  ante,  p.  L 


24  DEFINITION    AND    ESTABLISHMENT   OF    RELATIOM.  (Cb.    1 

Societies  not  Having  Gain  for  Their  Object. 

Societies  and  clubs,  the  object  of  which  is  not  to  share  profits, 
are  not  partnerships;  nor  are  their  members,  as  such,  liable  for 
each  other's  acts.'*  It  was  held  in  Caldicott  v.  Grimths^*  that  the 
members  of  the  "Midland  Counties  Guardian  Society  for  the  Pro- 
tection of  Trade"  were  not  partners  inter  se;  and  in  Flemyng  v. 
Hector/*  that  the  members  of  the  "Westminster  Reform  Club"  were 
not  partners  aa  against  third  persons.'*  It  la  a  mere  misuse  of 
words  to  call  such  associations  "partnerships";"  and.  if  liabilities 
are  to  be  fastened  on  any  of  their  members.  It  must  be  by  reason 
of  the  acts  of  those  members  themselves/*  or  by  n^ason  of  the 
iu  ts  of  their  agents;  and  the  agency  must  be  made  out  by  the  per- 
son who  relies  on  it,  for  none  is  implied  by  the  mere  fact  of  aaao- 
ciation." 

Ti  The  object  of  •  partnomhip  mait  be  to  iihiire  profits  arisinc  from  •oine 
prcilptormineiJ  bM»inf««H.  Therefore  a  Yonnj:  M.-n'i  ChrUtlan  A»«oc>ntlon  l«  not 
a  partnership,  not  being  formed  for  iK'cuninry  Rain.  Keg.  t.  Kob»..n.  16  Q.  B. 
Div.  137.  See  Andrewa  ▼.  Alexander.  !>.  It  8  Y^.  170.  Au«tln  t.  Thomson.  45 
N.  II.  113;  Edgerly  t.  Gardner,  0  Neb.  130.  1  N.  W.  1U04;  Eichbaum  ▼.  Irona, 
6  Watts  &  S.  (Pa.)  07. 

T4  8  Exoh.  808. 

T»2  Mees.  &  W.   172. 

T«  See.  also,  Tudd  t.  Emiy.  8  Mees.  ft  W.  nOR;    St.  James'  Club.  2  De  Gex,  M. 

&  G.  883. 

TT  Reg.  ▼.  Robson.  10  Q,  B.  I'iv.  137.  In  Lloyd  ▼.  Ix>arlng.  0  Ves.  773,  the 
Caledonian  Lodge  of  Freemasons,  and  in  Silver  t.  Barnes,  6  Blng.  N.  C.  180. 
and  Benumout  v.  Meredith.  3  Ves.  &  B.  ISO.  friendly  societies,  were  called  part 
nerships.  In  Minnltt  t.  Lord  Tulbot.  L,  H.  Ir.  1  Ch.  Dlv.  143.  i>erson8  who  had 
advanced  money  to  add  to  and  improve  a  club  were  lu-ld  to  have  a  lien  on  the 
property  for  their  money.     Cf.  Woodward  v.  Cowing.  41  Me.  0. 

T»  As  In  CroHs  v.  Williams,  7  Hurl.  &  N.  075,  where  the  commandant  of  a  rifle 
corps  was  held  liiible  for  all  uniforms  he  had  ordered. 

T»  Cf.  Flemyng  v.  Hector,  2  Mees.  &  W.  172.  and  Wood  ▼.  Finch.  2  Fost.  & 
F.  447  where  the  agency  was  not  established,  with  Luckombe  v.  Ashton,  Id. 
705,  Cockerell  ▼.  Aucon.pte,  2  C.  B.  (N.  S.)  440.  Burls  t.  Smith.  7  Bing.  705,  and 
Delauney  v.  Strickhiud.  2  Starkle,  410,  whore  the  agency  was  established.  In 
Luckombe  ▼.  Ashton  and  Burls  v.  Smith,  the  defendant  was  a  member  of  the 
managing  committee.  This  was  not  the  case  In  Cockerell  r.  Aucompte  or  De- 
launey T.  Strickland.  See,  also,  Thomas  v,  Edwards,  2  Mees.  &  W.  215;  Ash 
T.  Gule,  07  Pa.  St.  493;  Eichbauin  v.  Irons,  6  Watts  &  S.  (Pa.)  08;  Burt  v. 
Lathrop,  62  Mich.  106,  17  N.  W.  710;    Blukely  ▼.  Bennecke,  50  Mo.  103;    Rich- 


§§    7-8)  SUBJECT-MATTER.  26 

Whxit  Business  Enterprises  may  he  tfce  Subject  of  a  Partnership}  Agree- 
meni. 

Any  enterprise  proper  for  an  individual  to  engage  in  for  the  pur- 
pose of  enjoying  the  profits  of  it  may  as  properly  be  pursued  by  a 
partnership  for  a  like  purpose.  Chancellor  Kent  says  that  a  part 
nership  *'may  exist  between  attorneys,  conveyancers,  mechanics,  own 
ers  of  a  line  of  stage  coaches,  artisans,  or  farmers,  as  well  as  be 
tween  merchants  and  bankers."  *°  At  one  time  the  impression  pre- 
vailed that  a  partnership  could  not  validly  be  formed  for  the  purpose 
of  dealing  in  real  estate,  but.  under  the  modern  decisions,  real  estate 
forms  no  exception  to  the  rule  stated  above.** 

Same —  What  J  "a  rfn  ers  hips  are  Illegal. 

In  order  that  a  partnership  may  result  from  a  contract,  such  con 
tract  must  not  be  illegal.  Illegality,  however,  will  not  be  presumed, 
but  must  plainly  appear  to  enter  into  the  essence  of  the  contract. 
An  agreement  is  illegal  when  its  performnnce  involves  either  (1) 
tile  vioUition  of  positive  law,  or  (2)  when  it  is  opposed  to  public  pol- 
icy." 

The  following  are  illustrations  of  partnerships  illegal  because  in 
volving  the  violation  of  positive  law:  Partnerships  formed  for  tlu 
purpose  of  deriving  |)rofit  from  a  criminal  olTense — e.  g.  smuggling 
gambling,  robbery,  theft,  and  the  like — are  illegal. ••     So,  where  a 

mond   T.  Judy,  6  Mo.   App.  4G5;    Ferris  t.   Thaw,  B   Mo.   App.  279;    Lafood   v. 
Dcpms,  81  N.  T.  507. 

•  0  3  Kent.  Conini.  28. 

«i  Thompson  ▼.  Bowman,  6  Wall.  310.  Se*,  also,  Chester  ▼.  Diokerson.  54 
N.  Y.  1,  and  cases  there  cited;  Bates  v.  Babcock,  05  Cnl.  479,  30  Tac.  605; 
Flower  v.  BarnekofT,  20  Or.  137.  25  Tac.  370. 

»«  T.  Pars.   Partn.  S  8. 

•  »  A  bill  by  a  partner  of  a  lottery  firm  against  his  co-partners  for  discovery, 
for  a  snle  of  the  property,  and  a  distribution  of  the  proceeds,  will  not  be  enter- 
tained (Wntson  T.  Murray,  23  N.  J.  Eq.  257),  even  though  the  partnership  con- 
tracts were  entered  into  in  another  state,  where  such  contracts  are  legal  (Id.). 
See  Sykes  v.  Beadon,  11  Ch.  Div.  170.  The  same  was  held  as  to  a  partnership 
for  gambling.  Watson  t.  Fletcher,  7  Grat.  (Va.)  1.  See  Boggess  v.  Lilly,  18 
Tex.  200.  For  a  case  of  a  smuggling  partnership,  see  Biggs  v.  Lawrence,  3 
Term  R.  454;  Stewart  v.  Gibson.  7  Clark  &  F.  707;  T.  Pars.  Partn.  §  8.  See, 
also,  Gaston  v.  Drake,  14  Nev.  175  (agreement  to  divide  fees  of  office  of  district 
attorney »;  King  v.  Winants,  71  N.  C.  469;  and  Hunter  t.  Pfeiffer,  108  Ind.  197, 
9   N.    E.   124   (to   stifle  competitive   bidding  on   public   contract);     Davis   v.   Gel- 


26  DEFLVmON    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

Statute  prohibits  anqualified  persons  from  carrying  on  certain  trades 
i»r  business,  a  partnership  between  unqualified  persons  for  the  pur- 
pose of  carrying  on  such  a  business  would  be  illegal."     But  the 

bans,   44    Ohio   St.   G9,   4    N.   E.   503   (conreraion   of   public   funds):    Tenney   t. 
Foote.  95  III.  99  (deniinp  in  futuresi;    Wnnn  t.  Kelly.  5  Fed.  SS4  (Id.);    Patter- 
son's Appeal  (Pa.)  13  Wkly.  Notes  Cns.  154  (Id.c.    Williams  t.  Connor.  14  8.  C. 
621  (Id.):    Craft  t.  McConoughy,  79  III.  346  (combination  to  prercnt  competition 
in  trade)i    Morris  Run  Conl  Co.  t.  Barclay  Coal  Co..  68  Pa.  St.  173  (Id.);   C<?ntral 
Ohio  Salt  Co.  V.  Guthrie,  35  Ohio  St.  GGG  ad.).     Cf.  Falrbank  t.  Newton.  50  Wis. 
028,  7  N.  W.  rAZ.     A  curious  Instance  of  a  partnership  l>otwoen   two  highway 
men  is  said  to  have  come  before  the  courts  In  the  last  century.    As  the  case  Is  not 
to  be  found  In  the  reports,  an  abridKcd  note  of  it  Is  given  here  taken  from  Undl. 
Partn.    p.   94.       There    Is    some   doubt    whether   It    actually   occurred.       Real    or 
fJctlUooB.  It  Is  a  good  Illustration  of  an  lllogal  partnership  of  the  class  In  ques 
tlon:    "Everet  ▼.  Williams  (2  Poth.  Obi.,  by  Erans.  p.  3.  note  citing  2  Europ.  Mag. 
17S7.  p.  3<',0)  is  said  to  Unre  l>een  a  suit  institut.M  by  one  hiphwayuian  apunst 
another  for  an  account  of  their  plunder.      The  bill  stated  that  the  plaintiff  wn-^ 
skilled  In  dealing  In  sereral  commoclltles.  such  as  plate,  rings,  watches,  etc.;    th.n; 
the  defendant  applied  to  him  to  »)ccome  a  partner;    that  they  entered  Into  part 
nership.  and  It  ^vns  agreed   that   they  should  equally  prorlde  all  sorts  of  neces- 
saries,  such   as   horses,    saddles,    bridles,    and   equally    l>ear  all   exiH>nses   on    the 
roads  and  at  Inns,  taverns,  alehouses,  markets,  and  fairs;    that  the  plnintifT  and 
the  defendant  proceeded  Jointly  In  the  said  business  with  good  bucccm  on  Houn 
slow  Heath,  where  they  dealt   with  a  gentleman  for  a  goM   watch;    and  after 
wards  the  defendant   told   the  plnintiff  that    FinchUy.  In   the  county  of    Middl.- 
«ex.    was  a   good   and   convenient    place   to   deal   In.  and    that    commodities   wer. 
very  plenty  at  Flnchley.  and  It   would  be  almost  all  clear  gain   to  them;    that 
they  went  nccordingly,  and  dealt  with  several  gentlemen  for  divers  watches,  rings, 
swords,  canes,  hats,  cloaks,  horses,  bridles,  saddles,  and  other  things;    that  alwut 
a  month  afterwards  the  defendant  Informed  the  plaintiff  that   there  was  a  gen 
tieman  at  BInckhenth.  who  had  a  good  horw,  saddle,  bridle,  watch,  sword,  cane, 
and  other  Ihinps  to  dispose  of.  whirh  he  believed  might  lie  had  for  little  or  no 
money;    that  they  accordingly  went  and  met  with  the  said  gentleman,  and  after 
some  small  discourse  they  dealt  for  the  said  horse,  etc.;    that  the  plaintiff  and 
the    defendant   continued    their   joint    dealings   together    until    Michaelmas,    and 
dealt  together  at  several  places,  viz.  at  Bagshot,  Salisbury,  Ilampstead,  and  else- 
where to  the  amount  of  £2.0(X)  and  upward.     The  rest  of  the  bill   was  In  the 


•  4  LIndl.  Partn.  p.  9-1;  Williams  v.  Jones.  5  Barn.  &  O.  108.  See  Mitchell  ▼. 
Cockburne.  2  U.  Bl.  379;  Booth  v.  Hodgson.  6  Term  R.  405;  T^es  v.  Smith,  7 
Terra  R.  .338;  Everth  v.  Blarkburne.  2  Stnrkie,  66;  Ex  parte  Bell.  1  .Muule  & 
S.  751;  Aubert  v.  Maze.  2  Bos.  &  P.  371;  Watts  v.  Brooks.  3  Ves.  612;  Kuowles 
V.  Haiiirliton.  11   Ves.  168. 


§§    T-S)  SUBJECT-MATTER.  27 

mere  fact  that  one  or  more  members  of  such  a  partnership  are  dis- 
'jualitied  will  not  render  the  partnership  illegal  if  the  business  is, 
in  fact,  carried  on  bv  persons  dulv  qualified."  There  is  no  pre- 
sumption that  the  disqualified  one  was  to  perform  any  part  of  the 
duties  for  which  he  was  disqualified.  Thus,  where  a  statute  pro- 
hibits a  lawyer  or  a  physician  not  licensed  from  practicing,  a  part- 
nership between  him  and  a  licensed  practitioner  is  not  illegal,  if 
his  share  of  the  profits  is  not  in  consideration  of  his  practicing." 
But  where  a  sheriff  is  forbidden  to  buy  county  scrip,  but  he  does 
it  indirectly,  by  forming  a  partnership  for  that  purpose,  the  part 
nership  is  illegal.*^ 

A  partnership  may  he  illegal  upon  the  general  ground,  that  it  is 
formed  for  a  purpose  forbidden  by  the  current  notions  of  morality, 
or  public  policy.  A  partnership,  for  example,  formed  for  the  pur 
pose  of  deriving  profit  from  the  sale  of  obscene  prints,  or  for  the 
procurement  of  marriages,  or  of  public  ollices  of  trust,  would  be 
undoubtedly  illegal."  In  the  time  of  Charles  n.  it  seems  to  have 
been  held  that  a  contract  for  sharing  the  profits  derived  from  the 
public  exhibition  of  a  human  monster  was  illegal;"  this  decision 
would  not  probal)ly  now  be  followed.  While  two  countries  are  at 
war,  it  is,  by  the  law  of  each  country,  illegal  for  persons  resident  in 
either  to  have  dealings  with  persons  resident  in  the  other.  A  part- 
nership, therefore,  formed  between  persons  resident  in  this  country 

ordiuary  form  for  a  partnership  account.  The  bill  is  said  to  have  been  dismissed 
with  costs  to  be  paid  by  the  counsel  who  signed  it;  and  the  solicitors  for  the 
plaintiff  were  attached  and  fined  £50  .ipiece.  The  plaintiff  and  the  defendant 
were,  it  is  said,  both  hanged,  and  one  of  the  solicitors  for  the  plaintiff  was  after- 
wards transported.  See  20  Eq.  230,  note.  The  case  was  referred  to  by  Jessel, 
M.  R.,  in  [SykcB  v.  Beadon]  11  Ch.  Div.  105." 

•o  Lindl.  Tartn.  p.  H.l;  Raynard  v.  Chase,  1  Burrows,  2;  Candler  t.  Candler. 
Jac.  225,  6  Madd.  141;  Sterry  t.  Clifton,  9  C.  B.  110;  Turner  v.  Reyuall,  14  C. 
B.  (N.  S.)  328;    Harland  v.  Lilienthal.  '>?.  N.  Y.  438. 

»«  Scott  V.  Miller,  .Johns.  Eng.  Ch.  220. 

•  T  Read  t.  Smith,  GO  Tex.  379. 

«»  Sterry  t.  Clifton,  9  C.  B.  110  (sale  of  offices);  Pare  t.  Clogg,  29  Beav.  5S9, 
and  Thornton  t.  Haw,  8  Jur.  (N.  S.)  6G3  (associations  for  promulgating  irreligious 
opinions). 

80  See  Herring  t.  Walround,  2  Ch.  Cas.  110.  The  thing  exhibited  was  a  pair 
of  female  children,  having  "two  heads,  four  arms,  four  legs,  and  but  one  belly, 
where   their  two   bodies   were  conjoined." 


28  DEFINITION    AND    ESTABLISHMENT   OF    RELATION.  (Ch.    1 

for  the  purpose  of  trading  with  an  enemy's  country,  is  illegal;  and 
a  fortiori  is  such  a  partnership  illegal  if  one  of  the  members  of 
it  is  resident  in  that  country,  and  is  therefore  an  alien  enemy.** 
But  a  partnership  in  this  country  for  running  a  blockade  estab- 
lished by  one  belligerent  nation  in  the  ports  of  another  Is  not  Illegal; 
for,  subject  to  the  risk  of  capture,  a  neutral  may  lawfully  trade 
with  a  belligerent.**  Public  policy  does  not  permit  of  a  partnership 
In  a  public  office,  such  as  the  office  of  sherilT.**  prosecuting  attor- 
ney,** executor  or  administrator,**  and  the  like.**  On  a  sale  of  pub- 
lic lands,  it  is  not  unlawful  for  individuals  to  associate  together  to 
purcliase  for  their  joint  interest. •*  Hut  a  combination  to  prevent 
competition  between  bidders  on  a  public  contract  is  illegal,  though 
in  the  guise  of  a  partnership.*'  A  combination  of  manufacturers 
and  dealers,  formed  solely  to  enhance  the  price  of  articles  manu- 
factured and  dealt  in.  for  the  Iwneflt  of  its  tncmb»'rs,  cannot  sue, 
in  the  name  adopted  by  it  for  the  trau.HUcliou  of  busiuesa,  as  a 
co-partnership,  since  it  Is  illegal.* 

••  Evanii  T.  KIchardHon.  3  .Mor.  4«£»;  Snell  r.  Dwigbt,  I'JU  Mii»«.  »:  Dunham 
T.  Presby.  Id.  285.  See  Hraudoo  t.  .\r«bitt,  6  Term  IL  23;  M«Adam«'  Ex'ra  t. 
Ha  wee,  9  Bush  (Kj.)  ir>:  PfcufTor  t.  Maltl.T.  TA  Tex.  454  (tndlDg  iu  Coofwlerate 
money):  Amlcmoo'B  Adm'r  t.  Whitlock,  2  Huiih  (Ky.)  308  (Id.).  (Jenernlly.  as 
to  efloct  of  war.  aee  Prire  Cases.  '2  Black.  (KU".;    Tlio  Clionhire.  3  Wall.  'Sil. 

•  1  Ex  parte  Chavnwie.  4  De  (lex.  J.  &  8.  tt-V.;    Ti.o  H.  l.i,.  1,   IL  I  A.lm.  &  Ecc.  I. 

•  »  Jona  T.   I'erchard,  2  Esp.  5(/7. 

•  »  Gaston   t.    Drake,    14   NeT.    175. 

•«  Fornylh  t.  Woo<j8,  11  Wall.  4S4;  Serly'a  Adm'r  t.  Heck.  42  .Mo.  143;  liowen 
T.  Richardson,  133  .Mass.  21)3. 

»B  See  generally  Wolcott  t.  Gibson.  .'>!  III.  »H);  iloi  bs  v.  .Mclx'an.  117  U.  S.  5G7, 
6  Sup.  Ct.  STO;  Warner  t.  Griswold,  8  Wend.  (S.  Y.)  G«5;  Gould  t.  Kendall.  15 
Neb.  54l>.   lU  .\.   W.  483. 

»•  Piatt  T.  Oliver,  2  .McLean.  "JOT.  Fed.  Caa.  .Vo.  11,116.  See  L)u<lley  v.  Little. 
2  Ohio,  504. 

•T  See  King  t.  Winanta.  71  N.  0.  4GU;  Hunter  t.  Pf.iffer.  108  Ind.  15)7,  9  .N.  B. 
124.  Cf.  Wowlworth  v.  Bennett,  43  N.  1.  273;  Breslin  v.  Brown,  24  Ohio  St.  5(J6. 
The  business  of  furnishing  recruits  during  the  civil  war  wa*  a  lawful  one,  and 
the  members  of  a  partnership  formed  for  that  puriKjse  had  a  right  to  agree, 
in  their  articles  of  co-partnership,  that  they  would  not  come  in  competition  with 
each  other,  or  furnish  recruits  for  less  than  a  price  fixed.  Such  an  agreement  can 
only  be  condemned  on  proof  that  it  waa  made  aa  part  of  a  conspiracy  to  control 


•  Jackson  t.  AssociaUcn,  53  Ohio  St  303,  41  N,  E.  257. 


5§    7-S)  8DBJECT-MATTEB.  24) 

Same — Effect  of  Ulegality. 

The  law  will  not  interfere  between  the  members  of  an  illegal  part 
nership  to  compel  an  accounting  or  settlement  of  the  partnership 
affairs."*  Neither  a  division  of  the  protits,  nor  contribution  for 
losses,  can  be  enforced.  The  law  leaves  the  parties  where  it  finds 
them.  An  agreement  for  an  illegal  partnership  will  not  be  enforced 
even  if  it  has  been  partly  performed."'  So.  no  action  lit^  to  recover 
a  premium  agreed  to  be  paid  by  defendant  in  consideration  of  be- 
ing admitted  to  such  a  partnership.* °°  In  order,  however,  that  il- 
legality may  be  a  defense,  it  must  affect  the  contract  on  which  the 
plaintiff  is  compelled  to  rely,  in  order  to  make  out  his  right  to  what 
he  asks.  It  by  no  means  follows,  from  the  circumstance  that  money 
had  been  obtiiined  in  breach  of  some  law,  that,  therefore,  whoever 
is  in  possession  of  such  money  is  entitled  to  keep  it  in  his  own 
pocket.*"* 

prict?B  or  create  a  monopoly,  and  bo  ajminst  pabllc  policy,  or  thnt  It  was  made  for 
some  other  unlawful  purjiose.      Marsh  v.  Kuasell.  tiO  N.  Y.  288. 

••  See  Everett  t.  Williams,  ante,  note  83  ("accounting  between  highwaymen"). 
And  Bee  Craft  t.  McConoughy.  79  111.  340;  Snell  v.  U wight,  1*^0  Mass.  9;  Dun- 
ham V.  rresby.  Id.  '2So\  Sampson  v.  Slinw.  101  Mass.  l-iO:  Woodworlh  v.  Ben- 
nett. 43  N.  y.  273:  Uuraiit  v.  Kheuer,  liG  Minn.  SiSl,  4  N.  W.  010:  Watson  v. 
Murray.  113  N.  J.  Kq.  257;  Watson  v.  Fletcher,  7  Urat.  (Va.)  1;  Head  v.  Smith. 
00  Tex.  379:  Fairbank  t.  Leary.  40  Wis.  037;  Northrup  v.  Phillips.  1)9  111.  4llt; 
Planters'  Bank  v.  Union  Bank.  10  Wall.  4S3.  But  see  Brooks  t.  Martin,  2  Wnll. 
70.  A  part  of  the  business  being  legal  and  a  part  illegal,  in  an  action  to  wind  up 
the  court  may  take  charge  of  and  settle  that  part  of  the  business  which  is  legal 
but  not  the  part  which  is  illegal.      Anderson  t.  Powell.  44  Iowa,  20. 

•  »  Ewins  V.  Osbaldiston,  2  Mylne  &  C.  53. 

100  Williams  t.  Jones,  5  Bam.  &.  C.  108. 

io>  There  is  considerable  difference  of  opinion  between  the  authorities  as  to 
how  far  the  law  will  aid  wrongdoers.  Mr.  Bates,  in  his  work  on  l':irtnership 
(section  118),  summarizes  the  result  of  tke  cases  as  follows:  "(1)  Accounting  of  the 
affairs  of  an  illegal  partnership.  This  is  not  granted  by  the  court*.  (2)  Account- 
ing of  legal  InTestments  of  the  proceeds  of  a  past  and  settled  illegal  partnership, 
the  origin  of  the  fund  being  foreign  to  the  controversy.  This  is  granted.  (3)  Com- 
pelling settlement  of  balances  when  the  parties  themsclres  have  stated  their  own 
accounts,  and  nothing  remains  but  to  pay  oyer.  This  is  disputed."  See,  also, 
Woodworth  T.  Bennett,  43  N.  Y.  273. 


'60  DEFIMTIOM    AND    ESTABLISHMENT   OF    RXLATIOH.  \Ch.    1 


INTENTION    TO    BE    PARTNERS  —  WHAT    CONSTITUTES    A 

PARTNERSHIP. 

9.  Whether  or  not  a  contract  creates  a  partnership  depends 
on  the  real  intention  of  the  parties. 

Partnership,  alihouph  often  called  a  contract,  is  in  troth  the  result 
of  a  contract;  the  relation  which  subsists  betwrin  jHTsona  who  hare 
so  ajriTed  that  the  profits  of  a  business  enure  to  them  as  co-owners.'*' 
Whether  an  agreement  creates  a  partnership  or  not  depends  on  the 
real  intention  of  the  parties  to  it.**"  If  the  agreement  is  not  In  writ- 
ing, the  intention  of  the  parties  mu.st  be  ascertained  from  their  words 

>o>  It  is  remarkable  how  mnnj  writora  bare  fallra  iDto  the  error  of  referrinc  to  ■ 
partucrsliip  oa  "a  contract,"  iuiitc<«d  of  the  result  of  a  ixiiiLract.  See  (Iciiu.tions. 
note  1,  suprn.  and  other  deBnitiooa,  in  Liodl.  Parta.  p.  3  et  acq.  Partnership  la  a 
relation;    not  a  contract,  but  a  result  of  one. 

joj  "qiic  irui-  rtile  ex  a-quo  et  liono."  says  Judire  Story,  "would  seem  to  be 
that  the  aKrooroent  and  intention  of  the  parties  themselres  aboald  fforem  alJ  caaea 
*  *  *  unless  where  the  parties  hare  h«-IJ  theiuseirea  oat  aa  partners  to  the 
|)iili!ic.  or  tlifir  conduct  oiN-rated  as  a  fraud  or  dei-eit  upon  third  pcnona."  Story, 
I'artu.  I  41>.  It  la  to  be  rrcr^'ttrd  that  the  coiunicutator  should  hare  thus  intro- 
duced a  disturbing  element  into  otherwise  so  rU-ar  a  stati-oient  of  the  rale,  for 
the  qualification  confuses  the  subject.  We  will  see  hereafter  that  one  who  holds 
himself  out  as  a  partner  earns,  to  be  sure,  a  liability  thereby,  but  does  not  become 
a  partner.  l*he  other  case—the  caae  of  fraud  and  dect>it  mentioned— doca  not 
amount  to  an  exception  to  the  rule  by  any  ueana.  Here  is  the  old  notion  crop- 
|)inK  out,  aa  if  the  partnership  liability  waa  to  be  thrust  upon  aocne  one  aa  a  pMi- 
alty  fur  his  misdoinfp*.  It  would  seem  as  if  it  wns  in  sut-h  a  apirit  of  retributiTe 
justice  that  Ix>rd  Mansfield  determined  the  caae  of  Uloxham  ▼.  Pell,  dt«d  in 
2  \V.  Bl.  i)Ot),  and  so  laid  the  basis  of  so  much  discomfort  for  later  juJ^ea.  The 
simpler  rule  would  be  that  there  are  no  exceptions  to  the  doctrine  that  the  intention 
of  the  parties  should  Kovern  in  all  cases,  for  fraud  is  always  dclil>erate.  If  it  is 
shown  that  persons  who  really  are  partners  have  practired  to  delude  creditors  Into 
the  erroneous  belief  that  they  arc  not  |uirtners,  there  must  have  been  already  proof 
of  the  intention.  It  is  by  findinc  the  intention  that  the  fraud  is  uncorered.  In- 
tention was  not  formerly  recoipiired  as  the  tfst.  Grace  t.  Smith.  2  W.  Bl.  008; 
Cheap  V.  Cramond,  4  Harn.  &  Aid.  IJ«;3;  Wongh  r.  Carver,  2  U.  Bl.  'Zio.  Where 
one  does  not  allow  the  public  or  individual  dealera  to  be  deceived  by  the  appear 
ances  of  a  partnership,  the  test  of  the  existence  of  a  partuership  ia  the  intention 
of  the  parties,  as  shown  by  their  contract/  Webster  v.  Clarlc,  34  Fla.  IkJ?,  16 
South,  tJOl. 


§    9)  INTENTION    TO    BE    PARTNERS.  81 

and  conduct."*  If  the  agreement  is  in  writing,  its  tme  construction 
must  be  determined.  But  it  is  the  legaJ,  rather  than  the  declared,  in- 
tention that  controls.*"'      If  the  parties  intend  and  do  those  things 

J 04  As  to  evidence  of  partnership,  see  Lindl.  Partn.  p.  84;  Bates,  Partn.  {  115*4 
•t  seq.  Declarations  of  the  party  sought  to  be  chargetl  are  admissible.  2  Greenl. 
Et.  p,  487;  De  Berkom  v.  Smith,  1  Esp.  29.  "The  partnership  might  be  estab- 
lished by  the  several  admissions  of  all  those  who  were  alleged  to  compose  It,  or  by 
the  admissions  of  one  and  the  acts  and  d»H.laraiions  ol  tlio  others.  Welsh  v. 
Speakman,  8  Watts  &  S.  (Pa.)  2OT:  Taylor  v.  Henderson,  17  Si-rg.  &  R.  (Pa.) 
453;  Johnston  v.  Warden.  3  Watts  (Pa.)  101.  Nor  does  it  at  all  affect  this  right 
of  proof  by  the  plaintiff,  that  there  were  in  fact  articU-s  of  co-partuorehip  between 
the  defendants."  Heed  t.  Kremer,  111  Pa.  St  482,  5  Atl.  237.  But  declarations 
of  an  alleged  partner  not  a  party  to  the  suit  are  not  compc-tent  evidence.  Martin 
».  Kaffroth,  10  Serg.  &  K.  U'a.)  I'M;  Kirby  t.  Hewitt,  20  Barb.  (N.  Y.)  tJ07. 
On  an  issue  us  to  the  eiistiiicv  of  a  partnership  testimony  of  one  ailogt'd  partner 
is  admissible,  his  interest  going  only  to  his  credibility  and  not  to  his  i-umpttcncy. 
First  Nat  Bank  of  Wausau  v.  Conway,  «7  Wis.  210,  30  N.  W.  215.  On  an  isme 
of  partnership,  a  witne!«s  cannot  testify  that  he  and  defendant  were  portui-rs,  but 
must  state  the  facts  from  which  the  legal  conclusion  is  to  be  drawn.  Omaha  & 
Grant  Smelting  &  Refining  Co.  ▼.  lUicker,  0  Colo.  App.  334,  40  Pac.  853.  Whether 
a  partnership  existed  between  two  or  more  persons  Is,  after  the  facts  are  ascer- 
tained, a  question  of  law,  but  a  witness  who  knows  the  fact  may  nevertlieless 
state,  in  so  many  words,  that  tliey  were  partners.  The  party  against  whom  the 
testimony  Is  offered.  If  he  thinks  the  statement  is  founded  on  opinion  merelj. 
should  interrogate  the  witness  as  to  the  sources  of  his  knowledge.  McGrew  v. 
Walker,  17  Ala.  824;  Sankey  v.  Iron  Works,  44  Oa.  228.  it  is  not  error.  In  an 
action  betwii-n  |>or8on8  who  sue  as  partners  and  a  third  party,  to  permit  persona, 
whose  busini'ss  relations  with  the  alleged  partners  are  Intimate,  to  testify  as  to 
tb«  apparent  relations  between  them,  although  the  partnership  may  have  been 
constituted  by  indentures  or  other  writings.  American  Credit  Indemnity  Co.  ▼. 
Wood,  73  Fed.  81,  19  C.  C.  A.  2t34.  The  declarations  of  one  alleged  partner 
that  an  alleged  partnership  exists,  though  not  admissible  axmlnst  the  other  alleged 
partners,  are  properly  admitted  against  llie  one  making  them.  Boosalis  v.  Steven- 
sou.  02  Minn.  l'J3,  04  N.  W.  380;  Armstrong  v.  Potter,  103  Mich.  40'.>.  01  N. 
W.  057.  A  partnership  may  be  created  either  by  written  or  parol  contract,  or  it 
may  arise  by  the  joint  ownership,  use,  or  enjoyment  of  the  profits  of  the  undivided 
projjerty,  real  or  personal.      Oa.  Code  1882,  |  1887. 

»o»Chai)man  v.  Hughes,  104  Cal.  302,  37  Pac.  1(M8.  The  intention  to  become 
partners  may  be  inferred  In  the  case  of  individuals  who  claim  sincerely  that  they 
never  had  such  an  intention.  L,eggett  t.  Hyde,  68  N.  Y.  272;  Durjea  v.  Whit- 
romb,  31  Vt.  305;  Bigelow  ▼.  Elliott,  1  Cliff.  20,  Fed.  Cas.  No.  1,399.  "It  is  never- 
theless poflsible  for  parties  to  intend  no  partnership,  and  yet  to  form  one.  If 
•hey  agree  upon  an  agreement  which  is  a  partnership  in  fact,  it  is  of  no  importance 


32  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

which  the  law  declares  constitute  a  partnership,  then  the  parties  are 
partners;  and  an  express  stipulation  that  they  do  not  intend  to  form 
a  partnership  is  of  no  avail. ^'"  It  simply  shows  that  they  have  mis- 
taken the  legal  effect  of  the  agreement  which  they  intended  to  make. 
The  objection  that  persons  charged  as  partners  had  never  intended  to 
be  partners  was  thus  answered  in  a  leading  case:  ""WTiat  they  did  not 
intend  to  do  was  to  incur  the  liabilities  of  partners.  If  intending  to 
be  a  partner  is  intending  to  take  the  profits,  then  they  did  intend  to 
be  partners.  If  intending  to  take  the  profits  and  have  the  business 
carried  on  for  their  benefit  was  intending  to  be  partners,  they  did  in- 

that  they  call  it  something  else;  or  that  they  even  expressly  declare  that  they  are 
not  to  be  partners.  The  law  must  declare  what  is  the  legal  import  of  their  agree- 
ments, and  names  go  for  nothing  when  the  substance  of  the  arrangement  shows 
them  to  be  inapplicable.  But  every  duubtful  case  must  be  solved  in  favor  of  their 
intent;  otherwise  we  should  'carry  the  doctrine  of  construrtive  [mrtnership  so  far 
as  to  render  it  a  trap  to  the  unwary.'  Kent,  C.  J.,  in  Post  t,  Kimberly,  U  Johns. 
(N.  Y.)  470.  504."  iieecher  v.  Hush.  45  Mich.  188.  7  N.  W.  78o.  In  this  case. 
speaking  of  the  elements  of  partnership,  Cooley,  J.,  said:  "And  what  are  thi-seV 
At  the  very  least,  the  following:  Community  of  interest  in  some  lawful  commerce 
or  business  for  the  conduct  of  which  the  parties  erentually  are  principals  of  and 
agents  for  each  other  with  general  powers  within  the  siope  of  Uie  business,  which 
powers,  however,  by  agreement  l»t'tween  the  parties  themselves,  may  be  re«tricte«l 
at  option,  to  the  extent  even  of  making  one  the  sole  agent  of  the  others  and  of  the 
business."  In  any  controversy  between  the  parties  tliemselvea,  the  letter  of  their 
agreement  provnils.  London  Assur.  Co.  v.  Dreiuun,  116  U.  8.  401,  6  Sop.  Ct. 
442.  "A  partnership  inter  «e  must  result  from  the  Intention  of  the  parties  as 
expressed  in  the  contract,  and  they  cannot  be  made  to  assume  toward  each  other 
a  relation  which  they  have  expressly  contracted  not  to  assume.  The  terms  of  the 
agreement,  where  there  is  one,  fixes  the  real  status  of  the  parties  toward  each 
other.  If  there  is  no  agreement,  then,  if  they  deal  with  each  other  as  partners, 
sharing  losses  and  profits,  their  iiiterost  will  be  gathered  from  their  acts,  and  they 
will  be  partners  inter  se.  Colly.  I'artn.  §  U,  and  note.  A  mere  community  of 
interest  in  property  will  not  make  the  owners  partners.  There  must  be  an  agree- 
ment for  the  joint  venture  and  to  share  profits  and  losses;  and,  in  the  absence  of 
such  a  mutual  nRreement,  they  are  mere  tenants  in  common  of  the  property,  and 
the  act  of  one  will  not  bind  the  other."  SSailors  v.  Printing  Co.,  20  III.  App.  5(X). 
.See.  also,  RoseuGeld  v.  Haipht,  53  Wis.  2G0,  10  N.  W.  378;  Manhattan  Brass 
&  Manufg  Co.  v.  Sears,  45  N,  Y.  71)7;  Hitchings  v.  Ellis,  12  Gray  (Mass.)  452: 
McDonald  v.  Matney,  82  Mo.  358;  Uwinel  v.  Stone,  30  Me.  384;  Lindl.  Partn. 
(Weutw.   Ed.)  10;    Pooley  v.  Driver,  5  Ch.  Div.  458. 

io«  Chapman  v.  Hughes,  lOi  Cal.  3U2,  37  Pac.  1048,  and  38  Pac.  109;    Moor* 
T.  Davis.  11  Ch.  Div.  2G1. 


§    9)  WHAT   CONSTITUTES  A  PARTNERSHIP.  33 

tend  to  be  partners.  If  intending  to  see  that  the  money  was  applied 
for  that  purpose,  and  for  no  other,  and  to  exercise  an  efficient  control 
over  it,  so  that  they  might  have  brought  an  action  to  restrain  it  from 
being  otherwise  applied^  and  so  forth,  was  intending  to  be  partners, 
then  they  did  intend  to  be  partners."  "^ 

So,  on  the  other  hand,  the  mere  fact  that  the  parties  themselves  call 
their  relation  a  partncrshiji  will  not  mate  it  so.  '*Where  the  question 
of  partnership  is  to  be  detet  mined  from  a  contract  between  the  parties 
to  it,  the  relation  must  be  found  from  the  terms  and  provisions  of  the 
contract;  and,  even  though  parties  intend  to  become  partners,  yet,  if 
they  so  frame  the  terms  and  provisions  of  their  contract  as  to  leave 
them  without  any  community  of  interest  in  the  business  or  profits,  they 
are  not  partners  in  fact  or  in  law.  •  ♦  •  fh^  terms  of  the  agree- 
ment, where  there  is  one,  fix  the  real  status  of  the  parties  towards  each 
other."  ^"o 

Partnership  a  Mixed  Question  of  Laio  and  Fact. 

The  existence  of  a  partnership  is  a  mixed  question  of  law  and  fact.*"* 
Where  all  the  facts  are  admitted,  it  is  for  the  court  to  say  whether  or 
not  they  constitute  a  partnership.^^*  Thus,  the  court  must  say  wheth- 
er a  written  agreement  renders  the  parties  to  it  partners.^ ^^  But, 
where  the  facts  are  in  dispute,  the  court  will  instruct  the  jury  as  to 
what  facts  will  constitute  a  partnership,  and  it  is  for  the  ]nvy  to  say 
whether  or  not  a  partnership  exists;  ^^'   or,  if  a  special  verdict  is  de- 

»0T  Pooley  T.  Driver.  5  Ch.   Div.  458,  483. 
»o«  Sailors  v.  I'rinting  Co.,  20  111.  App.  509. 

109  Lindl.  Partn.  83;  BateF.  Partn.  §  1135;  Fox  t.  Clifton,  9  Bing.  117; 
Everitt  v.  Cliapmnn,  G  Conn.  'Ml;  Kingsbury  v.  Tharp,  61  Mich.  216,  28  N.  W. 
74;  lliompson  v.  Bank,  111  U.  S.  52t.>,  4  Sup.  Ct.  t>89.  "Whether  a  partnership 
exists,  is  a  question  of  fact;  what  a  partnership  is,  is  a  question  of  law."  T  .  Pars. 
Partn.  §  6,  citing  Uabriel  v.  Kvill.  Car.  &  M.  338;  Drake  v.  Elwyn,  1  Caincs 
(N.  Y.)  184;  Beecham  v.  DocM.  3  Har.  (Del.)  485;  Doggett  v.  Jordan,  2  Fla. 
541;  Everitt  v.  Chapman,  t>  Conn.  347;  Terrill  v.  Richards,  1  Nott  &  McC. 
(S.   C.)   20. 

110  Morgan  t.  Parrel,  58  Con:i.  413,  20  Atl.  614;  Everitt  t.  Chapman,  6  Conn. 
847;    Kingsbury  v.  Tharp,  61   Mich.  216.  28  N.  W.  74. 

111  Boston  &  C.  Smelting  Co.  v.  Smith,  13  R.  1.  27. 

112  Morgan  v.  Farrel,  58  Conn.  413,  20  Atl.  614;  McGrew  v.  Walker,  17  Ala. 
824;    Kingsbury   v.  'ITiarp,  6(1   Mich.  216,  28  N.  W.  74;    Everitt  v.  Chapman,  6 

GEO.PART.— 3 


84  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.   1 

Bired,  the  jury  will  determine  what  the  facts  really  are,  and  the  court 
will  then  determine  whether  or  not  such  facts  constitute  a  partnership. 


SAME— DEVELOPMENT  OF  MODERN  DOCTRINE. 

10.  The  development  of  the  modern  doctrine  "will  be  con- 

sidered with  reference  to  the  three  leading  cases  of 

(a)  Grace  v.  Smith  (p.  34). 

(b)  Waugh  V.  Carver  (p.  35). 

(c)  Cox  V.  Hickman  (p.  ?>?). 

11.  GRACE  V.  SMITH— "Every  man  who   has  a   share   of 

the  profits  of  a  trade  ought  also  to  bear  his  share 
of  the  loss." 

In  the  year  1775,  De  Grey,  C.  J.,  laid  down  the  proposition  in  Grace 
V.  Smith  "'  that  "every  man  who  has  a  share  of  the  profits  of  a  trade, 
ought  also  to  bear  his  share  of  the  loss."  The  reason  assigned  was 
that,  "if  any  one  takes  part  of  the  profit,  he  takes  a  part  of  that  fund 
upon  which  the  creditor  of  the  trader  relies  for  his  payment."  This  case 
has  always  been  regarded  as  the  great  authority  for  the  proposition 
that  a  person  who  shares  profits  is  liable  to  third  parties  as  if  he  were, 
in  fact,  a  partner.  The  judgment  itself  appears  to  have  been  based 
upon  the  prior  case  of  Bloxham  v.  Pell,  before  Lord  Mansfield,  and 
in  substance  undistinguishable  from  Grace  v.  Smith.  In  Bloxham  v. 
Pell  an  outgoing  partner  became  entitled  to  be  paid  by  the  continuing 
partner  a  certain  sum  of  money,  with  interest  at  5  per  cent.,  and  also 
an  annuity  of  £200  a  year  for  six  years,  in  lieu  of  the  profits  of  the 
trade.  The  plaintiff  sued  him  for  a  debt  contracted  after  the  dissolu- 
tion, and  Lord  Mansfield  held  the  defendant  liable,  on  the  ground  that 
the  agreement  was  a  device  to  make  more  than  legal  interest  of  money, 

Conn.  347;    Dulany  t.   Elford,   22  S.   C.  SOS;    Waggoner  v.   Bank,   43  Neb.  84. 
61  N.  W.  112. 

118  2  W.  Bl.  998,  1000.  The  reason  for  the  peremptory  nature  of  the  rule, 
viz.  "that  by  taking  part  of  the  profits  he  takes  from  the  creditors  a  part  of  the 
fund  which  is  the  proper  security  to  them  for  the  payment  of  their  debts,"  places 
the  question  of  partnership  or  no  partnership  upon  a  false  footing,  for  creditors 
do  not  look  to  profits  for  security  for  their  debts  at  all.  Lindl.  Partn.  7;  J. 
Pars.  Partn.  S  54. 


§    12)  WHAT    CONSTITUTES   A   PARTNERSHIP.  35 

and,  if  it  was  not  a  partnership,  it  was  a  crime,  and  it  should  not  lie 
in  the  defendant  Pell's  mouth  to  say  it  was  usury,  and  not  a  partner- 
ship. Lord  Mansfield  did  not  say  a  word  in  favor  of  the  doctrine  laid 
down  in  Grace  v.  Smith;  but  seeing  a  contract  which,  on  the  ground  of 
usury,  was  invalid  as  a  contract  of  loan,  he,  nevertheless,  upheld  it  as 
a  contract  of  partnership,  which  it  plainly  was  not,  but  which  was  the 
only  alternative  if  the  agreement  was  to  be  upheld  at  all.^^* 

12.  WAUGH  V.  CARVER— This  case  established  the  doc- 
trine that  all  persons  -who  shared  the  profits  of  a 
business  incurred  the  liabilities  of  partners  therein, 
although  no  partnership  bet"ween  themselves  might 
have  been  contemplated. 

In  1793,  18  years  after  the  decision  of  Grace  v.  Smith,  the  celebrated 
case  of  Waugh  v.  Carver  ^^'  was  decided.  In  this  case,  two  ship 
agents,  carrying  on  business  at  different  ports,  agreed  to  allow  each  oth- 
er certain  portions  of  each  other's  commissions  and  profits;  but  it  was 
expressly  agreed  that  neither  of  them  should  be  prejudiced  or  affected 
by  the  losses  of  the  other,  or  be  answerable  for  the  acts  of  the  other, 
but  each  should  be  answerable  and  accountable  for  his  own  losses  and 
acts.  It  was  admitted  by  the  court  that  this  agreement  created  no 
partnership  as  between  the  parties  to  it;  but  it  was  nevertheless  held, 
on  the  principle  enunciated  in  Grace  v.  Smith,  that  both  parties  to  the 
agreement  were  answerable  for  the  business  debts  of  each,  and  a  cred- 
itor who  sued  both  for  goods  supplied  to  one  obtained  judgment 
against  both  accordingly. 

Applications  of  the  Foregoing  Doctrines. 

Other  cases,  in  which  the  same  principle  was  applied,  need  only 
be  shortly  referred  to.  It  was  held  that  a  partnership  as  to  third 
persons  subsisted  between  merchants  who  divided  the  commissions 
received  by  each  other  on  the  sale  of  goods  recommended  or  "in- 
fluenced" by  the  one  to  the  other.^^*     So  between  persons  who  agreed 

11*  Cited  in  Grace  v.  Smith,  2  W.  Bl.  999.  See  Jestons  v.  Brooke,  2  Cowp. 
793.  "The  loan  does  not  become  a  partnership  because  the  interest  is  usurious." 
J.  Pars,  Partn.  §  66;   Gilpin  t.  Enderbey,  5  Barn.  &  Aid.  954. 

11 B  2  H.  Bl.  235;  2  Smith,  Lead  Cas.  (9th  Ed.)  1178. 

lie  Cheap  t.  Cramond,  4  Barn.  &  Aid.  663. 


36  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

to  share  the  profits  of  a  single  isolated  adventure;  ^^^  and  between 
peruons  one  of  whom  was  in  the  position  of  a  servant  to  the  others, 
but  was  paid  a  share  of  the  profits  instead  of  a  salary;  ^^^  and  be- 
tween persons,  one  of  whom  was  paid  an  annuity  out  of  the  profits 
made  by  the  others,"*  or  an  annuity  in  lieu  of  any  share  in  those 
profits.^^"  So  between  the  vendor  and  purchaser  of  a  business,  if 
the  former  guarantied  a  clear  profit  of  so  much  a  year,  and  was 
to  have  all  profits  beyond  the  amount  guarantied.^ ^^  Moreover,  the 
character  in  which  a  portion  of  the  profits  was  received  did  not  af- 
fect the  result;  for  a  person  who,  as  executor  or  trustee,  merely 
employed  money  in  trade  or  business,  and  shared  the  profits  arising 
from  it,  incurred  all  the  liabilities  of  a  partner,  although  he  in  fact 
had  personally  no  interest  whatever  in  the  matter.^ ^^  On  the  other 
hand,  the  cestuis  que  trustent  were  also  liable,  the  creditors  having 
an  option  against  which  of  the  two  they  would  proceed.^^'  Again, 
persons  who  shared  profits  were  partners  as  to  third  persons,  al- 
though their  community  of  interest  was  confined  to  the  profits. 
In  Smith  v.  Watson,^**  a  broker,  who  was  paid  by  a  share  of  the 
profits  arising  from  the  sales  made  by  him,  and  who  was  therefore, 
as  to  third  persons,  a  partner  with  the  person  employing  him,  was, 
nevertheless,  held  to  have  no  interest  in  the  goods  sold. 

Distinction  between  Sharing  Profits  and  Gross  Returns — Payments 

Varying  with  Profits. 

But,  notwithstanding  the  extent  to  which  the  doctrine  laid  down 
in  Grace  v.  Smith  was  carried,  it  was  long  ago  established  that  per- 
sons who  shared  only  gross  returns  were  not  partners  even  as  to 
third  persons;   and  subtle  distinctions  were  taken  between  a  pay- 

iiT  Hesketh  t.  Blanchard,  4  East,  144;  Ex  parte  Cellar,  1  Rose,  297;  Heyhoe 
T.  Burge,  9  C.  B.  431. 

118  Ex  parte  Digby,  1  Deac.  841;   Ex  parte  Rowlandson,  1  Rose,  92. 

118  In  re  Colbeck,  Buck,  48;  Ex  parte  Hamper,  17  Ves.  412;  Ex  part" 
Chuck,  8  Bing.  4G9; 

120  Bloxham  v.  Pell,  cited  in  Grace  t.  Smith,  2  W.  Bl.  999. 

121  Barry  v.  Nesham,  3  C.  B.  641.     Cf.  Pott  v.  Eyton,  Id.  y2. 

122  Ex  parte  Carlaud,  10  Ves.  119;  Labauchere  v.  Tupper,  11  Moore,  P.  O. 
198;    Wightman  v.  Townroe,  1  Maule  &  S.  412. 

128  See  Coddard  t.  Hodges,  1  Cromp.  &  M.  33. 
12*  2  Barn.  &  C.  401. 


§    13)  WHAT    CONSTITUTES   A   PARTNERSHIP.  37 

ment  out  of  profits  and  a  payment  varying  with  tliem,  and  between 
an  agreement  to  share  profits  as  such  and  an  agreement  to  share 
profits  not  as  profits,  but  as  something  else.^^" 

13.  COX  V.  HICKMAN — ^Persons  who  share  the  profits  of 
a  business  do  not  incur  the  liabilities  of  partners 
unless  that  business  is  carried  on  by  themselves  per- 
sonally, or  by  others  as  their  real  or  ostensible 
agents. 

The  doctrine  as  to  profit  sharing  first  enunciated  in  Grace  v. 
Smith,  and  firmly  established  by  Waugh  v.  Carver,^ ^^  remained  un- 
shaken until  1860,  when  the  case  of  Cox  v.  Hickman  "^  was  decided. 

tSB  Under  the  doctrine  of  Waugh  v.  Carver,  2  H.  Bl.  235,  in  any  apparent 
case  of  a  sharing  of  profits  the  only  mode  of  escape  lay  in  showing  that  it  was  a 
payment,  not  out  of,  but  varying  with,  profits  that  the  party  enjoyed.  This  dis- 
tinction was  developed  from  Grace  v.  Smith,  2  W.  Bl.  997,  and  its  predecessor, 
Bloxham  v.  Pell  (cited  in  2  W.  Bl.  998,  999),  and  arose  in  this  way:  In  each 
of  these  cases  an  outgoing  partner  was  to  be  paid  the  principal  and  interest  ol 
the  money  he  had  in  the  business,  and,  besides,  an  annuity  in  lieu  of  profits.  An 
estimate  of  the  figures  involved  in  such  an  arrangement  would,  in  case  of  a 
simple  loan,  have  made  an  usurious  contract  apparent;  and  in  Bloxham  v.  Pell 
Lord  Mansfield  rather  arbitrarily  decided  the  defendant  to  be  liable  as  a  part- 
ner, inasmuch  as,  in  order  to  escape  a  civil  liability,  he  would  have  to  admit  the 
commission  of  a  crime,  which  it  did  not  lie  in  his  mouth  to  do.  Thus,  no  caso 
being  allowed  to  be  made  out  contra,  a  sharing  of  profits  appeared  unmixed  with 
any  other  question,  and  a  partnership  liability  resulted.  But  in  Grace  v.  Smith 
the  jury,  although  being  advised  of  this  principle,  found  in  favor  of  the  de- 
fendant; and  De  Grey,  ,T.,  declined  to  disturb  the  verdict  respecting  the  right  of 
the  jury  to  find  facts,  and  inferring  that  they  had  found  the  payment  not  to 
have  actually  come  out  of  the  profits.  Subsequently  Lord  Eldon  in  Ex  parte 
Elamper,  17  Ves.  412,  confronted  by  these  two  opinions  in  the  case  before  him,  found 
it  necessary  to  reconcile  them;  and  so  reluctantly  announced  that  a  distinction 
existed  between  a  payment  out  of  profits  and  a  payment  varying  with  profits. 
It  is  hard  to  conceive  of  an  instance  better  serving  to  show  the  embarrassment 
(hat  excessive  technicality  may  give  to  jurisprudence.  It  can  be  readily  under 
stood  that  the  courts  were  eager  for  some  new  test  to  appear,  by  which  the  exis 
fence  of  a  partnership  could  be  determined  without  recourse  to  such  flimsy  dis 
tinctions. 

126  Grace  v.  Smith,  2  W.  Bl.  997;    Waugh  v.  Carver,  2  H.  Bl.  235. 

»27  8  H.  L.  Gas.  268.    See,  also,  same  case,  3  C.  B.  (N.  S.)  523,  18  O.  B.  617. 


38  DEFINITIOxN    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

This  case,  while  not  professing  to  overrule  the  earlier  cases,  cer- 
tainly overturned  the  former  doctrine  of  a  partnership  as  to  third 
persons  growing  out  of  the  mere  fact  of  profit  sharing,  and  placed 
a  great  branch  of  partnership  law  on  a  basis  of  sound  principle. 
It  is  difficult  to  assign  any  sound  reason  why  the  mere  fact  of  profit 
sharing  should  impose  the  extensive  liability  of  a  partner.  The  rea- 
son given  in  Grace  v.  Smith,  viz.  that,  "by  taking  a  part  of  the 
profits,  he  takes  from  the  creditors  a  part  of  that  fund,  which  is 
the  proper  security  to  them  for  the  payment  of  their  debts,"  is  an 
insufficient,  if  not  an  absurd,  reason.  It  the  first  place,  profits  are 
not  a  fund  for  the  payment  of  debts.  The  existence  of  debts  is  in- 
consistent with  the  existence  of  profits,  for  profits  are  what  remains 
after  all  debts  have  been  paid,^^*  Moreover,  it  is  difficult  to  under- 
stand why  a  person  lending  money  at  a  fixed  rate  of  interest  should 
be  treated  as  a  creditor,  and  be  exposed  to  no  risk  beyond  the  loss 
of  his  advance;  while  a  person  lending  money  at  a  rate  of  interest 
fluctuating  with  and  payable  out  of  the  profits  of  the  borrower 
should  be  treated  as  a  partner,  and  be  exposed,  not  only  to  the  loss 
of  his  money,  but  also  to  the  loss  of  whatever  else  he  might  have 
in  the  world. ^" 

The  principle  established  in  Cox  v.  Hickman,  stated  above  in  black 
letter,  brought  this  anomalous  class  of  cases  into  accord  with  the 
general  principles  of  liability  at  common  law,  and  recognized  the 
true  nature  of  a  partnership.  Under  the  principles  there  laid  down, 
partners,  of  course,  remain  liable  for  their  own  acts.  They  are  liable 
for  the  acts  of  their  copartners  because,  as  between  themselves, 
they  are  each  an  agent  of  all  the  others.  The  idea  of  a  partnership 
as  to  third  persons  distinct  from  a  partnership  inter  se  is  aban- 
doned; and  unless  the  relation  really  exists  as  between  themselves, 

1*8  "The  injustice  of  this  doctrine  of  partnership  as  to  third  persons  has  been 
jDore  or  less  deplored  by  text  writers.  Moreover,  the  illogical  and  untruthful 
foundation  upon  which  the  doctrine  rests  is  now  pretty  well  understood.  Per- 
sons held  liable  as  partners  to  third  persons  did  not  take  part  of  the  fund  upon 
which  creditors  relied,  any  more  than  did  a  salaried  agent,  and  in  fact  less  so; 
for  when  a  partnership  was  unable  to  pay  its  debts  it  was  because  there  were 
no  profits,  and  in  that  case  such  person  took  nothing;  whereas,  had  his  com- 
pensation been  definite,  the  fund  would  have  been  diminished."  Bates,  Fartn. 
I  15. 

i3»Lindl.  Partn.  p.  26. 


§  13)  WHAT  con3titute:s  a  partnership.  39 

so  as  to  make  them  all  agents  for  each  other,  persons  are  not  liable 
as  partners,  although  they  share  profits.^'**  This  case  arose  out  of 
the  financial  embarrassment  of  B.  Smith  &  Co.,  who,  being  large- 
ly and  variously  indebted,  entered  into  a  deed  with  their  creditors  to 
the  end  that  the  latter  should  be  paid.  Under  this  deed,  the  busi- 
ness was  to  be  thenceforth  carried  on  as  the  "Stanton  Iron  Com- 
pany," by  trustees,  who  were  to  pay  all  the  creditors  out  of  the 
net  income  of  the  business  (which  net  income  was  meantime  to  be 
deemed  the  property  of  the  Smiths),  and  to  hold  the  business,  after 
the  satisfaction  of  the  debts,  in  trust  for  the  Smiths.  A  majority 
in  value  of  the  creditors  were  to  make  such  rules  as  might  be  nec- 
essary for  the  management  of  the  business,  and  had  the  option  to 
discontinue  it  if  they  should  see  fit.  Cox  and  Wheatcroft  were  of 
the  trustees  named,  but  Cox  never  acted,  and  Wheatcroft  resigned 
six  weeks  after  his  appointment.  Subsequently,  an  indebtedness 
was  incurred  by  the  Stanton  Iron  Company  with  Hickman,  for  the 
amount  of  which  Hickman  drew  on  said  company,  and  the  drafts 
were  accepted,  in  these  words:     "At  Messrs.  Smith,  Payne  &  Co., 

180  "This  rase,  decided  in  the  highest  court  of  England,  was  at  once  the  end 
of  the  old  theory  of  partnership,  and  the  starting  point  of  a  new  doctrine.  It  put 
an  end  to  two  notions  which  had  been  regarded  as  fundamental:  First,  that 
third  persons  may  hold  to  the  liability  of  partners  those  who  in  fact  are  not 
partners,  merely  because  some  other  relation  exists  between  them;  second,  that 
participation  in  the  profits  of  a  business  is  conclusive  of  a  partnership.  The  case 
did  not,  however,  offer  any  alternative  test  of  a  partnership;  for  the  suggestion 
of  the  necessity  of  an  agency  is  of  no  assistance  in  a  doubtful  case.  The  agency 
is  the  result  of  the  partnership,  not  vice  versa."  T.  Pars.  Partn.  §  43.  See,  also, 
Holme  V.  Hammond,  L.  R.  7  Exch.  218,  233.  Story,  in  his  work  on  Partnership, 
so  early  as  1841,  says  of  a  partner:  "So  far  as  he  acts  for  himself  and  his  own 
interest  in  the  common  concerns  of  the  partnership,  he  may  properly  be  deemed 
a  principal;  and  so  far  as  he  acts  for  his  partners  he  may  as  properly  be  deemed 
an  agent.  The  principal  distinction  between  him  and  a  mere  agent  is  that  he  has 
a  community  of  interest  with  the  other  partners  in  the  whole  property  and  busi- 
ness and  responsibilities  of  the  partnership;  whereas  an  agent,  as  such,  has  no  in- 
terest in  either."  Section  1.  The  principle  of  Cox  t.  Hickman,  8  H.  L.  Cas. 
2GS,  was,  therefore,  not  a  new  one.  The  above  quotation  from  Story  was  cited 
by  Wensleydale  in  his  opinion  in  that  case,  and  the  same  principle  was  intro- 
duced into  other  cases  not  so  prominent  before  Cox  v.  Hickman.  See  Beckham 
V.  Drake,  9  Mees.  &  W.  79;  Wilson  t.  Whitehead,  10  Mees.  &  W.  503;  Ernest 
T.  Nicholls,  6  H.  L.  Cas.  400. 


40  DEFINITION    AND    ESTABLISHMENT    OF    RKLATION.  (Ch.    1 

London.  Per  proc  The  Stanton  Iron  Company.  James  Hay 
wood."  "The  question,"  says  Lord  Wensleydale,  in  considering  iIih 
case  in  the  house  of  lords,  "is  whether  either  of  the  defendants,  Cox 
or  Wheatcroft,  was  liable  as  acceptor  of  certain  bills  of  exchange, 
dated  in  March,  April,  and  June,  1855,  drawn  by  the  phiintifE  be- 
low on  the  Stanton  Iron  Company,  and  accepted  by  one  James  Hay- 
wood as  per  proc,  that  company.  And  the  simple  question  will  be 
this:  whether  Haywood  was  authorized  by  either  of  the  defendants, 
as  a  partner  in  that  company,  to  bind  him  by  those  acceptances." 
"It  is  often,"  observed  Lord  Cranworth,  "said  that  the  test,  or  one 
of  the  tests,  whether  a  person  not  ostensibly  a  partner  is,  never- 
theless, in  contemplation  of  law,  a  partner,  is  whether  he  is  enti- 
tled to  participate  in  the  profits.  This,  no  doubt.  Is,  in  general, 
a  sufficiently  accurate  test;  for  a  ri;zht  to  participate  in  profits 
affords  cogent,  often  conclusive,  evidence  that  the  trade  in  which 
the  profits  have  been  made  was  carried  on  in  part  for  or  on  behalf 
of  the  person  setting  up  such  a  claim.  Hut  the  real  ground  of  the 
liability  is  that  the  trade  has  been  carried  on  by  persons  acting  on 
his  behalf.  When  that  is  the  case,  he  is  liable  to  the  trade  obliga- 
tions, and  entitled  to  its  profits,  or  to  a  share  of  them.  It  is  not 
strictly  correct  to  say  that  his  right  to  share  in  the  profits  makes 
him  liable  to  the  debts  of  the  trade.  The  correct  mode  of  stating 
the  proposition  is  to  say  that  the  same  thing  which  entitles  him  to 
the  one  makes  him  liable  to  the  other,  namely,  the  fact  that  the 
trade  has  been  carried  on  in  his  behalf,  i.  e.  that  he  stood  in  the 
relation  of  principal  towards  the  persons  acting  ostensibly  as  the 
traders,  by  whom  the  liabilities  have  been  incurred,  and  under 
whose  management  the  profits  have  been  made.  Taking  this  to  be 
the  ground  of  liability  as  a  piu-tner,  it  seems  to  me  to  follow  tliat 
the  mere  concurrence  of  creditors  in  an  arrangement  under  whi<'h 
they  permit  their  debtor,  or  trustees  for  their  debtor,  to  continue 
his  trade,  apjilying  the  profits  in  discharge  of  their  demands,  doL-s 
not  make  them  partners  with  their  debtor  or  the  trustees.  The 
debtor  is  still  the  person  solely  interested  in  the  profits,  save  only 
that  he  has  mortgaged  them  to  his  creditors.  He  receives  the  bene- 
fit of  the  profits  as  they  accrue,  though  he  has  precluded  himself 
from  applying  them  to  any  other  purpose  than  the  discharge  of  his 
debts.    The  trade  is  not  carried  on  by  or  on  account  of  the  cred 


§     13)  WHAT    CONSTITUTES   A   PARTNERSHIP.  41 

iiors."  ^^^  "The  law,"  said  Lord  Wensleydale,  "as  to  partnership,  is 
undoubtedly  a  branch  of  the  law  of  principal  and  agent;  and  it 
would  tend  to  simplify  and  make  more  easy  of  solution  the  ques- 
tions which  arise  on  this  subject  if  this  true  principle  were  more 
constantly  kept  in  view.  *  *  *  A  man  who  allows  another  to 
carry  on  trade,  whether  in  his  own  name  or  not,  to  buy  and  sell, 
and  to  pay  over  all  the  profits  to  him,  is  undoubtedly  the  principal, 
and  the  person  so  employed  is  the  agent;  and  the  principal  is  liable 
for  the  agent's  contracts  in  the  course  of  his  employment.  So,  if 
two  or  more  agree  that  they  should  carry  on  a  trade  and  share  the 
profits  of  it,  each  is  a  principal,  and  each  is  an  agent  for  the  other, 
and  each  is  bound  by  the  other's  contract  in  carrying  on  the  trade, 
as  much  as  a  single  piincipal  would  be  by  the  act  of  an  agent,  who 
was  to  give  the  whole  of  the  profits  to  his  employer.  Hence  it  be- 
comes a  test  of  the  liability  of  one  for  the  contract  of  another,  that 
he  is  to  receive  the  whole  or  a  part  of  the  profits  arising  from  that 
contract  by  virtue  of  the  agreement  made  at  the  time  of  the  em- 
ployment. I  believe  this  is  the  true  principle  of  partnership  liabil- 
ity. Perhaps  the  maxim  that  he  who  partakes  the  advantage  ought 
to  bear  the  loss,  often  stated  in  the  earlier  cases  on  this  subject 
[Waugh  V.  Carver,  etc.],  is  only  the  consequence,  not  the  cause,  why 
a  man  is  made  liable  as  a  partner.  Can  we,  then,  collect  from  the 
trust  deed  that  each  of  the  subscribing  creditors  is  a  partner  with 
the  trustees,  and,  by  the  mere  signature  of  the  deed,  constitutes  thein 
liis  agents  for  carrying  on  the  business  on  the  account  of  himself 
and  the  rest  of  the  creditors?  I  think  not.  It  is  true  that  by  this 
deed  the  creditors  will  gain  an  advantage  by  the  trustees  carrying 
on  the  trade,  for,  if  it  is  profitable,  they  may  get  their  debts  paid: 
but  this  is  not  that  sharing  of  profits  which  constitutes  the  relation 
of  principal,  agent,  and  partner.*' 

In  the  later  ease  of  Bullen  v.  Sharp, ^^-  Blackburn,  J.,  in  comment- 
ing on  this  case,  said:  "Prior  to  that  decision,  the  dictum  of  De 
Grey,  C.  J.,  in  Grace  v.  Smith,  'that  every  man  who  has  a  share  of  the 

181  His  lordship  then  proceeded  to  show  that  Waugh  v.  Carver,  2  H.  Bl.  235, 
Bond  V.  Pittard,  3  Mees.  &  W,  357,  and  Barry  v.  Nesham,  3  C.  B.  G41,  applying 
to  them  the  test  enunciated  by  him,  were  correctly  decided. 

182  L.  R.  1  C.  P.  m. 


42  DEFINITION    AND    E-S TABLIsHMENT    OF    RELATION.  (Ciu    I 

profits  of  a  trade  ought  also  to  bear  a  share  of  the  loss.'  had  been 
adopted  as  the  ground  of  judgment  in  Waugh  v.  Carver,  where  it  waa 
laid  down  'that  he  who  takes  a  moiety  of  all  profits  indefinitely  shall, 
by  operation  of  law,  be  made  liable  to  losses,  if  losses  arise,  upon 
the  principle  that,  by  taking  a  part  of  the  profits,  he  takes  from  the 
creditors  a  part  of  that  fund  which  is  the  proper  security  to  them 
for  the  payment  of  their  debts.'  This  decision  had  never  been  over- 
ruled. The  reasoning  on  which  it  proceeds  seems  to  have  been  gen 
erally  acquiesced  in  at  the  time;  and  when,  more  recently,  it  was 
disputed,  it  was  a  common  opinion  (in  which  I.  for  one.  participated) 
that  the  doctrine  had  become  so  inveterately  part  of  the  law  of  F^ng- 
land  that  it  would  require  legislation  to  reverse  it.  In  Cox  v.  Dick- 
man  the  creditors  of  a  trader  had  agreed  that  their  debtor's  trade 
should  be  carried  on  for  the  pun>ose  of  paying  them  their  debts  out 
of  the  profits,  and  the  composition  dt^Hl  to  which  they  were  parties 
secured  to  them  a  property  in  the  profits.  The  rule  laid  down  in 
Waugh  V.  Carver,  if  logically  followed  out.  led  to  the  conclusion  that 
all  the  creditors  who  assented  to  this  deed.  and.  by  so  doing.  agre<'d 
to  take  the  profits,  were  individually  liable  as  jjartners;  but,  when  it 
was  sought  to  apply  the  rule  to  such  an  extreme  case,  it  was  ques 
tioned  whether  the  rule  itself  was  really  established.  There  was  a 
very  great  dilTerence  of  opinion  among  the  judges  who  decided  the 
case  in  its  various  stages  below,  and  also  among  those  consulted  in 
the  house  of  lords.  In  the  result,  the  hou.se  of  lords  (consisting  of 
Lord  Campbell.  C,  and  Lords  Urongham,  Cninworth,  Wensleydale. 
and  Chelmsford)  unanimously  decided  that  the  creditors  were  not 
partners.  The  judgments  of  Lord  Oaii worth  and  of  I>ord  Wensley- 
dale bear  internal  evidence  of  having  been  written.  Ix)rd  Campbell. 
C,  and  Lords  Brougham  and  Chelmsford  said  a  few  words  expressing 
their  concurrence.  It  is  therefore  in  the  written  judgments,  and 
more  especially  in  the  elaborate  judgment  of  Lord  Oranworth,  that 
we  must  look  for  the  ratio  decidendi.  •  •  •  j  think  that  the 
ratio  decidendi  is  that  the  proposition  laid  down  in  Waugh  v. 
Carver — viz.  that  a  participation  in  the  profits  of  a  business  does  of 
itself,  by  operation  of  law,  constitute  a  partnership — is  not  a  correct 
statement  of  the  law  of  England;  but  that  the  true  question  is,  as 
stated  by  Lord  Oranworth,  whether  the  trade  is  carried  on,  on  behalf 


§    13)  WHAT   CONSTITUTES  A  PARTNERSHiy,  4o 

of  the  person  sought  to  be  charged  as  a  partner,  the  participation  in 
the  profits  being  a  most  important  element  in  determining  that  ques- 
tion, but  not  being  in  itself  decisive;  the  test  being,  in  the  language 
of  Lord  Wenslejdale,  whether  it  is  such  a  participation  of  profits  as 
to  constitute  the  relation  of  principal  and  agent  between  the  person 
taking  the  profits  and  those  actually  carrying  on  the  business."  *" 

BoviVs  Act. 

The  reasoning  in  Cox  v.  Hickman  has  been  widely  adopted  by  the 
courts  of  the  several  states  of  the  Union,  as  well  as  by  the  supreme 
court  of  the  United  States;  so  that,  with  a  slight  reservation,  it  may 
be  said  that  the  rule  is  general  here.^'*     The  courts  of  some  of  the 

»••  It  was  said  by  Lord  Cranworth  in  the  house  of  lords  during  the  consid- 
eration of  Cox  V.  Hiclimnn,  8  H.  L.  Cas.  2GS:  "The  liability  of  one  partner  for 
the  acts  of  his  co-parlucr  is,  in  truth,  the  liability  of  a  principal  for  tlie  nets  of  his 
agent.  Where  two  or  more  persons  are  engaged  as  partners  in  an  ordinary 
trade,  each  of  them  has  an  implied  authority  from  the  others  to  bind  all  by  con- 
tracts entered  into  according  to  the  usual  course  of  business  in  that  trade.  Every 
partner  in  trade  is,  for  the  ordinary  puri)ose8  of  the  trade,  the  ugmit  of  his  co- 
partners, and  all  are  therefore  liable  for  the  ordinary  trade  contracts  of  the 
others." 

IS*  U.  S.  Sup.  Ct.  Share  of  profits  as  interest:  Moi'han  v.  Valentine,  145  U.  S. 
611,  12  Sup.  Ct.  972;  Id.,  29  Fed.  270.  Share  of  the  profits  to  widow  and  chil- 
dren or  from  money  left  in  business  by  di'ciased:  Jones  v.  Walker,  103  U.  S. 
444.  See,  also.  In  re  Francis  (1872)  2  Sawy.  280,  Fed.  Cas.  No.  5,031;  In  re 
Ward  (1879)  2  Flip.  402,  Fed,  Cas.  No.  17.144. 

Alabama.  ServJLes:  Randle  v.  State,  49  Ala.  14.  Rent:  McDonnell  v.  House 
Co.,  07  Ala.  90. 

Arkansas.     Interest:      Culley  v.  Edwards,  44  Ark.  423. 

Canada.  Rent:  Haydon  v.  Crawford,  8  U.  C.  Q.  B.  (O.  S.)  583;  Hawley  t. 
Dixon,  7  U.  C.  Q.  B.  218;  Great  Western  R.  Co.  v.  Preston  &  B.  R.  Co.,  17  U. 
C.  Q.  B.  477. 

Calilornia.  Services:  Wheeler  y.  Farmer,  38  Cal.  203.  Kent:  Quackeubush 
V.  Sawyer,  54  Cal.  439. 

Colorado.      Services:      Le  Fevre  v.  Castapuio,  5  Colo.  564. 

Connecticut.  Services:  Looniis  v.  Marshall,  12  Conn.  09;  Parker  ▼.  Canfield, 
37  Conn.  250.     Annuity,  etc.:    Pitkin  t.  Pitkin,  7  Conn.  307. 

District  of  Columbia.     Services:     Vinson  v.  Beveridge,  3  MacArthur,  597. 

Georgia.  Rent:  Contra,  Dalton  City  Co.  v,  Dalton  Manufg  Co.,  33  Ga.  243; 
Holifield  v.  White,  52  Ga.  507;    Adams  t.  Carter,  53  Ga.  160. 

Illinois.  Services:  Parker  v.  Fergus,  43  111.  437;  Burton  t,  Goodspeed,  69 
IlL  237.     Interest:     Niehofif  t.  Dudley,  40  111.  406;    Smith  v.  Vanderburg,  46  111. 


44  DEFLNITION    AND    ESTABLISHMF.NT    OF    RELATION.  (Oil.    1 

states  have  been  necessarily  more  tardy  than  those  of  others  in  adopt- 
ing the  rule,  but  all  are  in  the  Hue  of  progress  towards  making  it 

34;    Lintner  t.  Millikin.  47  111.  178.      See  Smith  t.  Knipht.  71  111.  148.     Rent: 
Parker  v.  Fergus,  43  111.  437;    Smith  t.  Vandcrburg,  40  111.  34. 

Indiana.     Services:       Ellsworth   t.  Pomeroy,   20   lud.    158.      Rent:      Kciscr   ▼. 
State,  58  Ind.  379.      See  Macy  v.  Combs,  15  Ind.  409. 

Iowa.     Services:     Holbrook  v.  Oberne.  50  Iowa.  324,  9  N.  W.  291;    Price  v. 
Alexander,  52  Am.  Dec.  520.     Rent:     Reed  v.  Murphy,  2  G.  Greene.  574.     See 
Williams  v.  Soutter,  7  Iowa,  435. 
Kansas.     Services:     Shep.nrd  v.  Pratt,  10  Kan.  209. 

Kentucky.     Services:     Donley  v.  Hall,  5  Bush,  549.     Contra.  Miller  ▼.  Hughes. 
1  A.  K.  Marsh.  181. 
Louisiana.     See  Chaffraix  ▼.  Lafitte,  .30  La.  Ann.  031. 

Maine.      Share   of    profits    in    payment   of   services    of  employfi:      Bigelow    t. 

Elliot.  1   Cliff.  28,   Fed.  Cas.   No.  1.39t>;    Holden  t.  French.  OS  Me.  211.      Share 

of  profits  as  rent:    Thompson  v.  Snow.  4  Me.  204;   Bridges  v.  Iron  Co..  r>7  Me.  ■'•»:» 

Maryland.     Services:     Taylor  v.  Tcrme.  3  Hnr.  &  J.  505;    Rowland  t.  Long. 

46  Md.  439.     Annuity,  etc.:     Ileiphe  ▼.  Littig.  03  Md.  301, 

Mass.uliusetts.  Services:  Holmes  v.  Uailniad  Co.,  5  Gray.  .')8;  Com.  ▼.  Bennett. 
118  Mass.  443.  Rent:  Holmes  v.  Railroad  Co.,  5  Gray,  58;  La  Mont  t.  FuUum. 
133  Mass.  583. 

Michigan.  Ser^-ices:  Monisnn  v.  Cole.  30  Mi«h.  I(i2.  Rc-nt:  B-e.her  v.  Bush. 
45  Mich.  188.  7  N.  W.  7^.';  Tlmyer  v.  Augustine.  Tyo  Mich.  1S7,  20  N.  W.  898. 
See  Cohvell  v.  Britton.  59  Mich.  3.'t».  20  N.  W.  538. 

Missouri.  Annuity,  etc.:  Philips  v.  Samuel.  70  ,Mn.  0.'".7.  See  Kellogg  News- 
paper Co.  T.  Farrell.  88  Mo.  594;  Kelly  v.  Gaines.  24  Mo.  App.  r.ix;;  Campbell 
v.  Dent.  .^4  Mo.  325. 

Montinia.     Interest:     Hunter  v.  Conrad  (Mont.)  44  Pac.  523.     See  Parchcu  v. 
Auder.son.  5  Mont.  4.38.  5  Pac.  588. 
Nebraska.     Services:     Strader  ▼.  White.  2  Neb.  .348. 
Nevada.     Services:     Mason  t.  Ilackett,  4  Nev.  4.:(». 

New  Hampshire.  Services:  Newman  v.  Bean.  21  N.  II.  9.3.  See  Eastman  y. 
Clark,  53  N.  H.  270  (elaborate  opinion  reviewing  cases).  Cf.  earlier  ease  of 
Bromley  v.  Elliot.  38  N.  II.  287. 

New  .Jersey.  Rent:  Perrine  v.  Ilankinson.  11  N.  J.  L.iw.  181.  See  Wild  v. 
Davenport.  48  N.  .1.  Law.  129.  7  Atl.  295;  Brundred  v.  Muzzy,  25  N,  J.  Law.  208. 
New  York.  Services:  Cassidy  v.  Hall.  97  N.  Y.  1.^)9;  Prouty  v.  Swift.  51  N. 
Y.  594.  Interest:  Leggott  v.  Hyde,  58  N.  Y.  272;  Orvis  v.  Curtiss,  12  Misc. 
Rep.  434,  33  N.  Y.  Supp.  589;  Richardson  v.  Hugliitt,  70  N.  Y.  55;  Curry  ▼. 
Fowler.  87  N.  Y.  33;  Cassidy  v.  Hall,  97  N.  Y.  159.  Rent:  Dake  v.  Butler,  7 
Misc.  Rep.  302,  28  N.  Y.  Supp.  134;  Heimstrut  v.  Howland,  5  Denio,  08.  De- 
fendant and  R.  entered  into  an  agreement  by  which  R.  agreed  to  negotiate  the 
sale  of  defendant's  yromissory  notes  in  a  certain  amount,  according  to  defend- 


§    13)  WHAT   CONSTITUTES  A  PARTNERSHIP.  45 

universal.  Among  the  tardy  courts  in  this  respect  have  been  those 
notably  of  the  states  of  New  York  and  Pennsylvania.*     In  the  former 

ant's  fiuancial  requirements,  receiving  as  compensation  a  commission  of  two-thirds 
of  1  per  cent.,  a  brokerage  of  one-fourth  of  1  per  cent.,  and  25  per  cent,  of  the  net 
profits  of  defendant's  business.  The  agreement  was  to  continue  for  one  year  un- 
less sooner  terminated  by  mutual  consent,  or  by  either  party  on  30  days'  notice.  R. 
was  to  have  no  part  in  the  management  of  the  business,  and  his  share  in  the 
profits  was  to  terminate  with  the  termination  of  his  employment.  Held,  that 
this  agreement  did  not  create  a  partnership,  so  as  to  render  R.  liable  for  debts 
incurred  by  defendant  in  the  business.  Winne  v.  Brundage  (Sup.)  40  N.  Y. 
Supp.  225. 

North  Carolina.  Services:  Mauney  v.  Coit,  86  N.  C.  463;  Day  v.  Stevens,  88 
N.  C.  83.  A  lessor  of  property  by  a  contract  under  which  he  is  to  receive  as 
rent  or  compensation  for  its  use  a  share  of  the  proceeds  or  net  profits  of  the 
business  in  which  it  is  employed  docs  not  become  liable  as  a  partner  of  the 
lessee.     N.  C.  Code  1883,  §  1744. 

Ohio.  Services:  McArthur  v.  Ladd,  5  Ohio,  514.  Rent:  Johnson  v.  Miller,  16 
Ohio.  431.      See  Harvey  v.  Childs,  28  Ohio  St.  319. 

Pennsylvania.  Services:  Edwards  v.  Tracy,  62  Pa.  St.  374;  Dale  v.  Pierce,  85 
Pa.  St.  474.  Interest:  Eshlenian  v.  Harnish,  76  Pa.  St.  97;  Lord  y.  Proctor,  7 
I'liiln.  630;  Wessols  v.  Weiss,  166  Pa.  St.  490,  31  Atl.  247:  Hart  v.  Kelley,  83 
I'a.  St.  286;  Irwin  v.  Bidwell,  72  Pa.  St.  244.  Rent:  Brown  v.  Jaquette,  94  Pa. 
St.  113.  By  the  law  of  Pennsylvania  any  person  may  loan  money  to  any  in- 
dividual, firm,  or  corporation  upon  agreement  to  receive  a  share  of  the  profits  in 
lieu  of  interest,  and  such  agreement  shall  not  render  him  a  partner  as  against 
creditors,  except  as  to  money  so  loaned,  provided  such  agreement  be  in  writing, 
and  that  he  does  not  hold  himself  out  as  a  partner  or  induce  credit  to  be  given  to 
the  firm.  Pepper  &  L.  Pa.  Dig.  "Partnership"  §  16.  Individuals  and  corporalion.s 
may  give  a  share  of  the  profits  to  employes  in  lieu  of  wages  without  rendering 
them  partners,  either  as  ngainst  creditors  or  between  each  other.  Pepper  &  L.  Pa. 
Dig.  "Partnership,"  §  17. 

Rhode  Island.    Interest:     Boston  &  C.  Smelting  Co.  v.  Smith.  13  R.  I.  27. 

South  Carolina.     Services:     Chapman  v.  Lipscomb,  18  S.  C.  233. 

Tennessee.     Services:     Polk  v.  Buchanan,  5  Snecd,  721. 

Texas.     Services:     Buzard  v.  Bank,  67  Tex.  83,  2  S.  W,  54.      Interest:     Id. 

Vermont.  Share  of  profits  in  payment  of  services  of  employS:  Morgan  ▼. 
Steams,  41  Vt.  398.     Rent:    Tohias  v.  Blin,  21  Vt.  544;   Felton  v.  Deall,  22  Vt.  ITO. 

Virginia.  Services:  Wilkinson  v.  Jett,  7  Leigh,  115.  Rent:  Bowyer  v. 
Anderson,  2  Leigh,  550. 

West  Virginia.    Rent:    Chapline  v.  Conant,  3  W.  Va.  507. 

•  In  the  recent  case  of  Wessels  v.  Weiss,  166  Pa.  St.  490,  36  Wkly.  Notes  Cas. 
Ill,  31  Atl.  247,  decided  in  1895,  the  court  said:  "The  agreement  between  the 
defendants   made  them  partners  at  oommon  law  and  in   this  state.     The  case 


46  DEFINITION    AND    ESTABLI:>HMKNT    OF    RELATION.  (Ch.    1 

of  the  States  named,  the  court,  in  one  case,*"  insisted  that  the  leading 
cases  in  Great  Britain  *"  that  have  marked  the  departure  from  the 

of  Wangh  v.  Carver,  2  H.  Bl.  235,  decided  In  179.3.  which  followed  Grace  v. 
Smith,  2  W.  Bl.  998,  decided  in  1775,  was  followed  and  adopted  to  its  full  ex- 
tent in  Purviancp  v.  McClintee,  6  Serg.  &  R.  259,  in  ISJO.  The  well-settled  rule 
of  Waugh  V.  Carver  was  overruled  in  England  in  1860  by  the  case  of  Cox  t. 
Hickman,  8  H.  L.  Cas.  2G8,  but  there  has  been  no  departure  from  it  in  this 
state,  except  by  legislation  in  1870.  In  the  opinion  in  Edwards  v.  Tracy,  62  Pa. 
St.  374,  decided  in  1869,  Sharswood,  J.,  pointed  out  the  new  English  rule  of  Cox  t. 
Hickman,  but  followed  the  old  one  of  Waugh  v.  Carver,  saying:  'It  is  entirely 
too  late  now  to  question  either  the  rule  or  the  exception.  We  are  bound  to  staud 
KUper  antiqnas  vias  by  onr  own  decided  cases.*  In  the  opinion  In  Ix)rd  ▼. 
Proctor,  7  Phila.  630,  decided  at  nisi  prius  the  same  year,  he  s.aid  that  the  rule  in 
Waugh  T.  Carver  was  too  nncieut  a  landmark  in  our  law  to  be  now  disturbed, 
and  that  it  had  accordingly  been  followed  in  Edwards  v.  Tracy.  Since  the  act 
of  1870,  there  has  been  no  change  in  judicial  decision."  The  points  decided  in 
this  case  were  as  follows:  Where  a  person  loans  a  merchant  money,  for  which 
he  is  to  receive,  at  a  B|>ecified  rate,  interest,  and,  in  addition  thereto,  a  certain  per 
cent,  of  the  net  profits  of  the  business,  he  becomes  a  partner  at  common  law. 
Act  April  6,  1870  (P.  L.  .'tOl,  provides  that  a  loan  of  money  upon  an  agreement 
to  receive  a  share  of  the  profits  of  the  business  in  lieu  of  Interest  shall  not  make 
the  lender  liable  as  a  partner  except  as  to  the  money  loaned,  provided  the  agree- 
ment l>e  in  writing,  and  the  party  shall  not  hold  himself  out  as  a  general  partner. 
Held,  that  where  the  lender  n;;ree«  to  rtneive  a  share  of  the  profits  of  tln'  Imsi- 
ness  of  the  borrower,  and  interest  in  mMition  thereto,  and  the  agreement  as  to 
the  interest  is  not  in  writing,  such  statute  does  not  apply.  See,  also,  Merrnll  t. 
Dobbins,  169  Pa.  St.  480.  32  Atl.  578. 

186  Leggett  V.  Hyde.  58  N.  Y.  272.  In  Ilnckett  v.  Stanley.  115  N.  Y.  lIi:.'.  22 
N.  E.  745,  Stanley  agreeil  to  loan  Oorh.'im  $750  for  use  in  his  business,  taking 
Gorham's  note  for  said  amount  and  interest,  with  collateral  security:  and  lu 
consideration  of  this  and  of  any  further  advances  he  might  make,  at  his  own 
option,  and  of  his  services  in  securing  sales  in  the  business,  he  was  to  be  given 
n  share,  to  wit,  one-half,  of  the  profit.s.  Any  advance  to  the  business  made  by 
either  of  the  parties  was  to  bear  interest  while  employed,  and  could  be  with- 
drawn at  the  option  of  the  party  advancing  it.  Stanley  was  to  be  given  quarter- 
ly true  statements  of  the  condition  of  the  business.  On  the  theory  of  Leggett 
V.  Hyde,  Stanley  was  held  to  be  a  partner.  "Prior  to  Cox  ▼.  Hickman,  there  was 
no  question  at  all  but  that  any  one  'sharing  in  the  profits,'  even  though  without 
intention  to  be  a  partner,  would  be  held  to  be  a  partner  as  to  third  persons. 
This  rule  was  universally  adopted  both  in  England  and  America.  The  judges  in 
Cox  T.   Hickman  hardl/  realised  what  a  revolution  they  were  making,  and  for 


isecox  V.  Hickman,  8  H.  L.   Cas.  268;    Bullen  ▼.  Sharp.   L.  R.   1  C.   P.  86; 
Holme  T.  Uamuiund,  L.  R,  7  Exch.  218. 


^13)  WHAT   CONSTITUTES  A  PARTNERgHIP.  47 

old  theories  in  regard  to  the  test  of  the  partnership  relation  resulted- 
not  from  Cox  v.  Hickman,  but  from  legislation  had  in  England  sub- 
sequently to  the  decision  of  that  case;  and  the  court  wont  on  to  say 

this  reason  some  American  courts  have  refused  to  follow  it;  and  yet  its  force  is 
felt  in  every  American  court,  even  though  some  of  such  courts  repudiate  the  case 
itself.  The  logical  result  of  Cox  v.  Hickman  was  to  abolish  all  differences  be- 
tween partnership  inter  scse  and  partnership  as  to  third  parties  in  every  instance 
except  that  of  estoppel.  A  good  many  American  courts,  realizing  that  this  is  the 
true  rule,  have  adopted  the  result  fully.  There  are  two  cases  in  which  the  rule 
and  results  of  Cox  v.  Hickman  have  been  elaborately  discussed  by  able  American 
judges.  Eastman  v.  Clark,  53  N.  H.  276;  Bceoher  v.  Bush.  45  Mich.  ISS,  7  N. 
W.  785.  In  New  York,  however,  we  find  a  deliberate  recognition  of  the  rule 
of  Grace  v.  Smith  and  Waugh  v.  Carver.  So,  also,  we  find  a  recognition  in  some 
of  the  older  cases  of  the  distinction  between  sharing  in  'gross  returns'  and  'net 
profits.'  Up  to  58  N.  Y.  we  find  the  law  in  New  York  almost  precisely  like  the 
law  in  England  down  to  tlie  time  of  Cox  v.  Hiekman,  the  chief  exception  bein? 
that,  where  a  man  was  to  have  a  certain  share  of  the  profits  for  the  sole  purpose 
of  compenBating  him  for  his  services,  he  was  held  not  to  be  a  partner,  although 
sharing  the  profits.  The  case  of  Cox  v.  Hickninn  was  first  considered  in  New 
York,  and  dismissed  and  reinidiatcd  in  terms  by  Folger,  J.,  in  Leggett  v.  Hyde. 
.'>8  N.  Y.  272.  But,  though  claiming  to  repudiate  Cox  v.  Hickman,  yet  its  in- 
fluence was  continually  to  be  seen  in  the  New  York  decisions,  which  held,  at 
various  times,  that  where  a  man  (1)  gets  compensation  for  property  advanced  or 
delivered,  or  (2)  for  money  loaned,  or  (3)  for  services  rendered,  by  sharing  in 
the  profits,  such  'sharing  in  the  profits'  alone  would  not  constitute  the  man  a 
partner.  So  it  seemed  that,  while  still  declining  to  follow  Cox  v.  Hickman,  yet 
the  New  York  courts  were  gradually  abandoning  the  old  English  rule,  and  work- 
ing unconsciously  up  to  the  new  one.  The  intermediate  cases  disclosing  this 
change  are  noted  and  discussed  in  Cassidy  v.  Hall,  97  N.  Y.  159.  See,  also,  Bur- 
nett V.  Snyder,  81  N.  Y.  550,  where  the  court  in  terms  denies  Cox  v.  Hickman, 
but  adopts  Its  substantial  results.  After  the  latter  decision,  the  opini<jn  gen 
erally  prevailed  that  the  rule  of  Cox  v.  Hickman  was  tacitly,  yet  plainly,  the 
rule  adui)ted  by  New  York.  But  this  opinion  was  shaken,  and  the  law  thrown 
back  into  the  state  of  confusion  that  it  was  in  after  Judge  Folger's  decision  in 
Leggett  V.  Hyde,  supra,  by  the  opinion  of  Ruger,  C.  J.  (declaring  that  Cox  r 
Hickman  had  never  been  acknowledged  in  New  York,  and  that  Grace  v.  Smith 
and  Waugh  v.  Carver  were  still  the  recognized  authorities),  in  the  case  of  Hack- 
ett  V.  Stanley,  115  N.  Y.  625,  22  N.  E.  745.  As  a  matter  of  fact,  the  facts  of 
this  case  were  such  that,  following  either  rule,  the  decision  would  have  been  the 
same  in  any  event.  Thus  the  law  in  New  Y'^ork  on  this  question  at  the  present 
day  seems  hopelessly  confused,  and  will  so  remain  until  the  court  of  appeals 
eventually  clears  it  up,  as  it  must  do  sooner  or  later."  From  Proressor  Collin'u 
lectures  before  law  class  at  Cornell  University,  1892-93. 


48  DEFINITION    AND    ESTABLISHMENT   OF    RELATION.  (Cb.   1 

that,  nntil  similar  legislation  should  be  had  in  New  York,  it  would 
have  no  warrant  for  making  the  same  departure.  In  this  the  court 
was  plainly  in  error.^'^  "Bovil's  Act,"  ^^*  to  which  it  had  reference, 
is  for  the  most  part  merely  declaratory  of  what  was  existing  law  at 
the  time  it  passed,  its  fifth  section  being  the  only  one  that  seemed 
to  have  added  anything  to  the  law.  According  to  Lindley,^'®  the 
act  is  remarkable  rather  for  what  it  does  not  than  for  what  it  does 
contain;  and,  for  this  shortcoming,  it  has  received  unfavorable  criti- 
cism at  the  hands  of  other  authorities.'*"  The  force  of  Bovil's  Act 
is  mainly  that  the  acceptance  of  shares  of  profits  shall  not  of  itself 
affect,  with  a  partnership  liability,  persons  in  four  several  situations 
mentioned  in  the  act.  At  the  same  time,  it  subjects  those  persons 
in  two  of  these  situations  to  some  extent  to  the  creditors  of  the 
trader.  The  persons  so  excepted  from  liability  are  (1)  mere  loaners 
of  money  under  written  contract,  whose  remuneration,  in  lieu  of  in- 
terest, arisi's  out  of  or  varies  with  the  profits;  **^  (2)  employes  who 
accept  a  share  of  profits  in  compensation  for  their  services;  (3)  the 
widow  or  children  of  a  deceased  j)artner,  who  receive  shares  by  way 
of  an  annuity;  (4)  the  selh-r  of  the  good  will  of  the  business,  to  whom 
has  been  given  a  share  by  way  of  annuity,  in  consideration  of  the 
sale.  The  fifth  section  modifies  the  first  and  fourth  by  making  such 
lonners  of  money  and  such  sellers  of  good  will  subordinate  to  other 
creditors  of  the  trader  in  case  the  latter  should  become  insolvent  or 
bankrupt. 

18T  The  BeTeral  classes  of  recipients  of  profits  covered  by  Bovil's  act  received 
recognition  by  the  courts,  and  were  held  not  to  be  partners  without  reference  to 
the  act.  As  to  owners  of  money  and  employ6»  of  the  trader  their  status  has 
been  declared  by  the  New  York  court  of  appeals  in  very  clear  language  in 
Cnssidy  v.  Hall,  97  N.  Y.  159.  The  right  of  a  widow  to  receive  profits  by  way  of 
annuity  without  incurring  liability  was  recognized  so  far  back  as  Waugh  v. 
Carver,  2  H.  Bl.  235;  Lord  Chief  Justice  Eyre  opening  the  opinion  in  that  case 
with  a  reference  to  such  right.  The  seller  of  the  good  will  would  seem  to  be 
antitled  to  protection  when  taking  his  share  of  profits,  just  as  a  retiring  partner 
would  be  protected  in  a  like  case.      See  Grace  v.  Smith,  2  W.  Bl.  998. 

188  28  &  29  Vict.  c.  86. 

!«•  Lindl.  Partn.  36.     See,  also,  Pol.  Dig.  art.  7. 

1*0  Sir  George  Jessel,  in  Pooley  v.  Driver,  5  Ch.  Div.  471. 

1*1  In  I'ennsylvania  also  such  loaners  of  money  are  by  statnte  declared  not  to 
be  liable  as  partners.     Act  April  6,  1870  (P.  L.  56). 


§    13)  WHAT   CONSTITUTES  A  PARTNERSHIP.  49 

Mutual  Agency  as  a  Test  of  Partnership. 

It  has  been  thought  that  Cox  v.  Hickman  established  mntuaJ 
agency  as  a  test  of  the  existence  of  a  partnership.**'  But,  while  it 
is  conceded  that  partners  are  agents  for  each  other,  a  slight  can- 

1*2  Eastman  v.  Clark,  53  N.  H.  276.  tor  the  purpose  of  determining  whether 
a  person  is  a  partner  in  a  trade  firm,  the  test  is  whether  the  trade  in  question  is 
carried  on  on  behalf  of  the  pers  n  who  is  sought  to  be  charged  as  a  partner.  Hol- 
lom  V,  Whichelow,  64  Law  J.  Q.  B.  170.  Lindley  says  the  effect  of  Cox  v.  Hick- 
man was  to  establish  the  doctrine  that  no  person  who  does  not  hold  himself  out 
as  a  partner  is  liable  to  third  persons  for  the  acta  of  persons  whose  profit  he 
shares  unless  he  and  they  are  really  partners  inter  se,  or  unless  they  are  his 
agents.  Lindl.  Partn.  34.  There  is  quite  a  difference  of  opinion  as  to  whether 
mutual  agency  is  a  final  test  of  partnership.  Sir  George  Jessel,  in  Pooley  v. 
Driver,  5  Ch.  Div.  45S,  dissented  from  the  notion  of  its  being  such  a  test.  Ac- 
cording to  him:  "You  do  not  help  yourself  in  the  slightest  degree  in  arriving 
at  a  conclusion  by  stating  that  he  must  be  an  agent  for  the  others.  It  is  only 
stating  in  other  words  that  he  must  be  a  partner,  inasmuch  as  every  partnership 
involves  this  kind  of  agency;  or,  if  he  state  that  he  is  agent  for  the  others,  you 
state  that  he  is  a  partner,"  In  Holme  v.  Hammond,  L.  R.  7  Exch.  218,  this 
disparity  of  views  was  presented  very  forcibly  through  the  differing  opinions  of 
the  members  of  the  exchequer  court  by  which  the  case  was  heard.  Martin,  B., 
there  referring  to  Cox  v.  Hickman,  said:  "Lord  Wensleydale  and  Lord  Cran- 
worth  took  part  in  the  judgment,  and  it  seems  to  me  that  the  principle  on  which 
their  opinions  proceeded  is  correctly  stated  by  O'Brien,  J.,  in  the  case  of 
Shaw  v.  Gait,  16  Ir.  C.  L.  357.  He  there  expresses  himself  as  follows:  'The 
principle  to  be  collected  from  them  appears  to  be  that  a  partnership,  even 
as  to  third  parties,  is  not  constituted  by  the  mere  fact  of  two  or  more  per- 
sons participating  or  being  interested  in  the  net  profits  of  a  business;  but 
that  the  existence  of  such  partnership  implies  also  the  existence  of  such  a  re- 
lation between  those  persons  as  that  each  of  them  is  a  principal  and  each  an 
agent  for  the  others.' "  But  Cleasby,  B.,  although  concurring  with  the  rest  of 
the  court  on  the  main  question  there,  criticises  the  passage  above  quoted  from 
the  opinion  of  Martin,  B.  "I  must  add,  however,"  he  remarks,  "that  I  cannot 
quite  concur  in  the  passage  cited  by  my  Brother  Martin  from  the  judgment  of 
O'Brien,  J.,  in  Shaw  v.  Gait,  to  the  effect  that  the  existence  of  partnership  is 
to  be  ascertained  by  seeing  whether  each  is  principal  and  agent  to  and  for  the 
others.  My  view  is  that  agency  is  deduced  from  partnership,  rather  than  part- 
nership from  agency."  Kelly,  C.  B.,  said:  "In  some  of  those  cases  the  law 
of  principal  and  agent  has  been  referred  to  as  governing  the  matter  in  question: 
but  this  branch  of  the  law  has  really  no  bearing  upon  the  case  of  partnership,  ex- 
cept, indeed,  that  whenever  a  contract  of  partnership  among  commercial  men 
exists,  each  partner  is  in  point  of  law  the  agent  for  the  others,  and  for  the  firm 
collectively,  and  they  are  bound  by  any  contract  he  may  enter  into  within  the 
GEO  .PART.— 4 


60  DEFINITION    AND    ESTABLISHMENT    OF    RELATIO  (Ch.   1 

sideration  will  show  that  mutual  agency  is  not  a  test  of  partnership. 
Mutual  agency  is  the  result  of  partnership,  not  partnership  the  result 
of  mutual  agency.^*"  This  is  well  expressed  in  the  case  of  Meehan 
V.  Valentine,^**  as  follows:  "As  has  been  pointed  out  in  later 
English  cases,  the  reference  to  agency  as  a  test  of  partnership  was 
unfortunate  and  inconclusive,  inasmuch  as  agency  results  from  part- 
nership, rather  than  partnership  from  agency.  ♦  *  ♦  Such  a 
test  seems  to  give  a  synonym  rather  than  a  definition ;  another  name 
for  the  conclusion,  rather  than  a  statement  of  the  premises  from 
which  the  conclusion  is  to  be  drawn.  To  say  that  a  person  is  liable 
as  a  partner  who  stands  in  the  relation  of  principal  to  those  by  whom 
the  business  is  actually  carried  on  adds  nothing  by  way  of  precision, 
for  the  very  idea  of  partnership  includes  the  relation  of  principal  and 
agent." 

Ownership  of  Profits  the  Ultimate  Test  of  Partnership. 

Cox  V.  Hickman  established  the  proposition  that  partners  are  the 
agents  of  each  other,  but,  for  reasons  just  explained,  mutual  agency 
is  not  the  test  of  a  partnership.  The  ultimate  and  conclusive  test 
of  a  partnership  is  the  co-ownership  of  the  profits  of  a  business.*** 

scope  of  the  partnership  with  reference  to  the  nature  of  the  undertaking,  this 
agency  being  an  incident  to  the  contract  of  co-partnership." 

1*3  Meechem,  Partn.  §  66. 

1*4  145  U.  S.  611,  12  Sup.  Ct.  972. 

1*0  In  most  of  the  later  cases  the  courts  have  reached  their  conclusion  through 
the  application  of  the  test  above  mentioned,  viz.  whether,  as  the  effect  of  the  evi- 
dence produced,  it  appears  that  the  share  of  profits  that  the  defendant  took  was 
taken  because  he  had  a  proprietorship  in  them,  or  merely  because  it  was  paid 
over  to  him,  or  intended  to  be  so  paid,  by  way  of  compensation  for  something,— 
such  as  services  performed,  Rawlinson  v.  Clarke,  15  Mees.  &  W.  292;  Ross  v. 
Parkyns,  L.  R.  20  Eq.  331;  Loomis  v.  Marshall,  12  Conn.  69;  Hay  ward  v.  Bar- 
ron (Com.  PI.)  19  N.  Y.  Supp.  383;  Sohns  v.  Sloteman,  85  Wis.  113,  55  N.  W. 
158;  Aetna  Ins.  Co.  v.  Bank  (Neb.)  67  N.  W.  449;  Whiting  v.  Leakin,  66  Md. 
255,  7  Atl.  688;  or  money  or  property  or  credit,  Bullen  v.  Sharp,  L.  R.  1  C.  P. 
86;  Dubos  v.  Jones,  34  Fla.  539,  16  South.  392;  Ex  parte  Tennant,  6  Ch.  Div. 
303;  Mollwo  t.  Court  of  Wards,  L.  R.  4  P.  C.  419;  Boston  &  C.  Smelting  Co. 
T.  Smith,  13  B.  I.  27;  Cassidy  v.  Hall,  97  N.  Y.  159;  Meehan  v.  Valentine,  145 
U.  S.  611,  12  Sup.  Ct.  972;  or  the  letting  of  property,  Lyon  v.  Knowles,  3  Best 
&  S.  556;  Holmes  v.  Railroad  Co.,  5  Gray  (Mass.)  58;  Dake  v.  Butler,  7  Misc. 
Rep.  302,  28  N.  Y.  Supp.  134;  Beecher  v.  Bush,  45  Mich.  188,  7  N.  W.  785; 
Brown  v.  Jaquette,  94  Pa.  St.  113;   or  the  use  of  effects,  real  or  personal,  by  one 


§    13)  WHAT   CONSTITUTES  A  PARTNERSHIP.  61 

'If  there  !s  community  of  profits,  a  partnership  follows.  Community 
of  profits  means  a  proprietorship  in  them,  as  distinguished  from  a 
personal  claim  upon  the  other  associate.     In  other  words,  a  property 

of  two  persons,  but  owned  jointly,  French  v.  Styring,  2  C.  B.  (N.  S.)  366  (see  Pol. 
Dig.  art.  1) ;  or  otherwise  where  as  is  the  case  in  these  instances  the  proprietorship 
and  the  agent  character  do  not  meet  in  the  same  person,  Kilshaw  v.  Jukes,  3  Best 
&  S.  847.  A  contract  between  V.  and  G.,  trading  as  the  S.  M.  Co.,  of  the  first 
part,  and  B.,  of  the  second  part,  recited  that  whereas  the  first  parties  were  de- 
sirous of  securing  additional  capital,  and  the  second  party  was  willing  to  con- 
tribute the  amount  desired  on  the  terms  that  V.  shall  be  the  general  manager  at 
$15  per  week,  "and  then,  after  the  payment  of  all  expenses  in  conducting  the 
business  of  the  company,  the  parties  of  the  first  part  agree  to  pay  to  the  party 
of  the  second  part,  for  the  use  of  the  said  ?2,000,  an  amount  equal  to  one-third  of 
the  net  profits  arising  out  of  the  business."  Held,  that  such  contract  did  not 
make  B.  a  partner.  Thillman  v.  Benton,  82  Md.  64,  33  Atl.  485.  Where  a  mer- 
chant employs  a  person  in  his  business,  and  agrees  to  pay  him  a  stated  salary,  and, 
in  addition,  a  certain  percentage  of  the  profits  of  the  business,  the  contract  does 
not  constitute  such  merchant  and  the  person  so  employed  co-partners,  as  a  matter 
of  law.  Stockman  v.  Michell  (Mich.)  67  N.  W.  336.  Only  the  recipient  of  prof- 
its as  the  owner  of  them  becomes  liable  as  a  partner.  Meehan  v.  Valentine,  145 
U.  S.  611,  12  Sup.  Ct.  972.  A  proposition  made  by  defendant  to  plaintiff  to  em- 
ploy him  "in  my  business,"  to  pay  "a  stipulated  salary,"  and  "a  sum  of  money 
equal  to  forty  per  cent."  of  certain  specified  sources  of  revenue,  "you,  as  my  em- 
ploye, not  to  be  liable  for  any  losses  (beyond  your  profits  as  stipulated),"  and  ac- 
cepted by  plaintiff,  does  not  constitute  a  partnership,  and,  under  the  agreement, 
plaintiff  is  not  liable  for  losses  in  the  business,  except  as  affecting  his  percentage 
of  profit.  Stafford  v.  Sibley  (Ala.)  17  South.  324.  Where  there  was  an  uncer- 
tainty as  to  whether  the  parties  intended  a  joint  interest  in  the  profits,  or  only  a 
common  interest,  the  question  of  partnership  was  for  the  jury,  the  contract  being 
in  parol.  Phillips  v.  Furniture  Co.,  92  Ga.  596,  20  S.  E.  4.  For  an  explanation 
of  the  peculiar  sense  in  which  the  Georgia  court  uses  the  terms  "joint"  and  "com- 
mon" interest,  see  Sankey  v.  Iron  Works,  44  Ga.  228.  A  joint  interest  in  the 
partnership  property,  or  a  joint  interest  in  the  profits  and  losses  of  the  business, 
constitutes  a  partnership  as  to  third  persons.  A  common  interest  in  profits  alone 
does  not.  Ga.  Code  1882,  §  1890.  "In  the  present  state  of  the  law  upon  this 
subject,  it  may  perhaps  be  doubted  whether  any  more  precise  general  rule  can 
be  laid  down  than,  as  indicated  at  the  beginning  of  this  opinion,  that  those  per- 
sons are  partners,  who  contribute  either  property  or  money  to  carry  on  a  joint 
business  for  their  common  benefit,  and  who  own  and  share  the  profits  thereof  in 
certain  proportions.  If  they  do  this,  the  incidents  or  consequences  follow  that 
the  acts  of  one  in  conducting  the  partnership  business  are  the  acts  of  all;  that 
each  is  agent  for  the  firm  and  for  the  other  partners;  that  each  receives  part  of 
the  profits  as  profits,  and   takes  part  of  the  fund  to  which  the  creditors  of  the 


•52  DEFINITION    AND    ESTABLISHMENT   OF   RELATION.  (Ch.    1 

right  in  them  from  the  start  in  one  associate  as  much  as  in  the 
other."  **•  Stipulating  for  a  compensation  in  proportion  to  the 
profits  or  payable  out  of  them  will  not  confer  the  privileges  or  im- 
pose the  liabilities  incident  to  a  partnership,  unless  it  confers  a 
jus  in  re,  as  distinguished  from  a  demand  or  chose  in  action.  The 
reason  for  the  distinction  is  that  where  a  share  of  the  profits  earned 
under  an  agreement  is  taken  by  one  because  he  is  the  owner  of  a 
proportionate  part  of  the  whole,  and  not  because  his  associates  owe 
him  a  debt  of  that  amount,  the  parties  are  necessarily  mutual  agents, 
and  hence  partners,  within  the  rule  of  Cox  v.  Hickman.  This 
is  because  one  cannot  become,  ipso  facto,  the  owner  of  profits 
earned  by  another,  unless  that  other  is  his  agent  in  earning  those 
profits.  On  the  other  hand,  where  a  share  of  the  profits  earned 
under  an  agreement  is  merely  a  debt  or  personal  claim  by  one  party 
against  his  associates,  growing  out  of  services  rendered,  or  the  use 
of  property,  the  parties  are  not  mutual  agents,  and  hence  not  part- 
ners. This  is  because,  if  the  parties  were  mutual  agents,  the  profits 
earned  by  one  of  them  would  necessarily  belong  ipso  facto  to  all 
of  them  as  principals,  which  is  contrary  to  the  hypothesis.  If  a  par- 
ty who  himself  earns  profits  is  not  entitled  to  them,  or  any  part 
of  them,  as  owner,  but  only  as  a  debt  due  from  another,  it  must 
be  because  he  earned  them  in  the  capacity  of  employ^  or  agent  of 
that  other  solely,  and  not  jointly  for  himself;  and  the  relation  is  that 
of  principal  and  agent,  or  master  and  servant,  and  not  that  of  part- 
nership. 

partnership  hare  a  right  to  look  for  the  payment  of  their  debts;  that  all  are  liable 
as  partners  upon  contracts  made  by  any  of  them  with  third  persons  within  the 
scope  of  the  partnership  business;  and  that  even  an  express  stipulation  between 
them  that  one  shall  not  be  so  liable,  though  good  between  themselves,  is  ineffectual 
as  against  third  persons.  And  participating  in  profits  is  presumptive,  but  not 
conclusive,  evidence  of  partnership."  Meehan  v.  Valentine,  supra.  "The  rule  is 
easily  laid  down.  The  difl3culty  is  in  its  application.  Where  a  part  of  the  profits 
themselves  is  the  property  of  the  party,  he  is  then  a  partner.  Where  their 
amount  merely  ascertains  the  amount  of  a  debt  or  duty,  but  they  themselves  do 
not  belong  to  the  party,  there  it  is  not  a  partnership."  Henderson,  C.  J.,  in  Cox 
T.  Delano,  3  Dev.  (N.  C.)  89,  90. 

1*0  Bates,  Partn.  §  30.  See,  also,  Mechem,  Partn.  §  68;  J.  Para.  Partn.  §  54. 
Community  of  profits  is  the  essence  of  a  partnership.  Griffen  v.  Cooper,  50  111. 
App.  257.     If  there  is  a  community  of  interest  in  the  profits,  as  such,  of  the 


S    14)  TESTS   OF  INTENTION.  53 

SAME— TESTS  OP  INTENTION. 

14.  The  existence  of  an  intention  to  form  a  partnership 
must  be  determined  with  a  view  to  all  the  facts 
and  circumstances,  and  not  by  any  arbitrary  tests. 
Various  tests  have  been  suggested,  however,  w^hich 
will  be  discussed  under  the  following  heads: 

(a)  Agreements  to  share  both  profits  and  losses  (p.  55). 

(b)  Agreements  to  share  profits  only  (p.  58). 

(c)  Agreements  to  share  gross  returns  (p.  63). 

We  have  thus  far  learned  that  a  partnership  depends  upon  the 
consent  and  intention  of  the  parties  to  be  partners,  and  that  an  in- 
tention to  be  partners  is  nothing  more  or  less  than  an  intention  to 
carry  on  a  business  and  share  the  profits  as  joint  owners.  Various 
tests  have  been  proposed  by  which  the  intention  of  the  parties  may 
be  determined  when  not  clearly  expressed,  but  none  of  them  are 
wholly  satisfactory  or  conclusive.  Judge  Cooley  says  that,  "so  far 
as  the  notion  ever  took  hold  of  the  judicial  mind  that  the  question 
of  partnership  or  no  partnership  was  to  be  settled  by  arbitrary  tests, 
it  was  erroneous  and  mischievous,  and  the  proper  corrective  has 
been  applied."  **^  The  intention  must  be  sought  in  the  whole  con- 
tract, and  all  the  circumstances  of  the  case.  It  would  be  difficult 
to  say  just  what  acts  and  circumstances  will  prove  the  real  situa- 
tion and  intention  of  the  parties  with  reference  to  the  profits.  The 
fact  of  capital  being  invested  in  the  business,  the  right  of  inter- 
ference in  the  management,  the  participation  in  profits, — although, 

business,  and  not  by  way  of  compensation  for  services  rendered  or  capital  loaned 
towards  the  prosecution  of  the  business,  it  is  sufficient  to  constitute  a  partner- 
ship. Waggoner  v.  Bank,  43  Neb.  84,  61  N.  W.  112.  Where  persons  enter  into 
a  trade  arrangement  giving  them  a  community  of  interest  in  the  capital  stock 
engaged  in  the  trade,  and  in  the  profits  resulting  therefrom,  they  are  partners. 
Webster  v.  Clark,  34  Fla.  637,  16  South.  601.  A  contract  reciting  that  in  con- 
sideration of  a  salary  of  a  certain  amount  per  annum  paid  by  the  party  of  the 
first  part  (a  firm)  to  the  party  of  the  second  part,  and  a  further  consideration  of 
a  certain  share  in  the  net  profits  of  the  business  of  the  firm,  the  party  of  the 
second  part  agreed  to  devote  his  time  to  their  business  as  engineer,  is  a  contract 
of  employment,  not  of  partnership.  Porter  v.  Curtis  (Iowa)  65  N.  W.  824. 
147  Beecher  v.  Bush,  45  Mich.  188,  200,  7  N.  W.  785. 


64  DEFINITION    AND    ESTABLISHMENT   OF    RELATION.  (Ch.    1 

perhaps,  no  one  of  these  indicia  would  control  the  settlement  of  the 
question,  some  or  all  of  them  would  combine  to  make  the  proof 
complete.^** 

1*8  See  Cox  v.  Hickman,  9  C.  B.  (N.  S.)  85,  per  Pollock,  B.;  Rosa  v.  Parkyna, 
L.  R.  20  Eq.  331;  Mollwo,  March  &  Co.  v.  Court  of  Wards,  L.  R.  4  P.  C.  435; 
Pooley  V.  Driver,  5  Ch.  Div.  458;  Ex  parte  Tennant,  6  Ch.  Div.  303;  Ex  parte 
Delhasse,  7  Ch.  Div.  511.  Defendant  was  an  attorney  at  law  and  agreed  to 
render  all  the  legal  services  necessary  to  protect  W.  in  the  enjoyment  of  cer- 
tain mines,  the  lease  of  which  defendant  was  active  in  procuring,  and  was  to 
receive  therefor  part  of  the  net  profits.  W.  had  the  exclusive  management  and 
control  of  the  mines.  Held,  that  the  agreement  did  not  make  a  partnership  inter 
se.  Omaha  &  Grant  Smelting  &  Refining  Co.  v.  Rucker,  6  Colo.  App.  334,  40 
P.  853.  Two  persons  were  held  to  be  partners  where  they  had  agreed  one  to 
pay  the  other  £9  per  annum  per  mile  the  distance  between  two  points,  this  other  to 
carry  mail  between  the  points,  the  two  to  share  the  expense  of  repairing  the 
carts,  and  to  divide  the  profits;  all  expenses  being  by  them  first  paid.  Green 
v.  Beesley,  2  Bing.  N.  C.  108.  Here  was  an  agreement  concerning  the  business 
and  community  of  profits  in  that  business  arising  very  plainly  from  the  agree- 
ment. But  where  one  of  three  persons,  joint  owners  of  land,  agreed  to  loan 
money  to  the  other  two  for  the  purchase  of  ironmongery  to  be  used  in  the 
construction  of  houses  on  the  land  contemplated  by  the  latter  persons  to  be 
built  by  them  to  sell  again,  the  loaner  to  be  repaid  out  of  the  proceeds  of  the 
sale  of  the  houses,  and  to  lose  his  money  pro  tanto  if  the  sale  did  not  realize 
suflScient  to  pay  it  all  back  to  him,  the  loaner  was  not  a  partner.  Kilshaw  v. 
Jukes,  3  Best  &  S.  847.  Meehan  v.  Valentine,  145  U.  S.  611,  12  Sup.  Ct.  972,  is 
a  stronger  case.  Here,  in  consideration  of  loans  to  be  made  a  firm  by  an  in- 
dividual the  former  agreed  to  pay  the  latter,  in  addition  to  the  interest  on  the 
sum  loaned,  one-tenth  of  the  net  profits  over  and  above  $10,000  on  the  business 
for  one  year.  But,  in  the  event  of  the  profits  not  reaching  $10,000,  he  was  to 
be  paid  only  the  interest,  and  no  profits  at  all.  Held  no  partnership.  H.  agreed 
to  "loan  and  advance"  to  M.  and  L.,  under  the  firm  name  of  N.  Bros.,  $5,000, 
from  time  to  time,  as  the  business  might  require;  the  money  to  remain  a  per- 
manent fund  not  less  than  one  year  nor  more  than  five  years.  In  consideration 
of  this,  N.  Bros,  agreed  to  devote  their  time  and  skill  to  the  business,  to  keep 
accounts,  open  to  H.'s  inspection,  and  pay  him  semiannually  three-fifths  of  the 
profits,  guarantying  that  they  should  amount  to  at  least  $3,000  annually.  For 
security,  H.  was  given  a  lieu  on  all  the  firm  property.  The  agreement  might  be 
conlinued  by  H.  for  10  years.  N.  Bros,  were  to  contract  no  debts  outside  the 
business,  and  not  to  draw  on  the  firm  property  except  for  necessary  support.  A 
violation  of  the  contract  was  to  be  "regarded  as  an  end  of  the  loan,"  and  H. 
might  then  seize  all  the  firm  property  to  satisfy  his  advances.  Held,  that  H. 
was  a  partner  as  to  third  persons.  Rosenfield  v.  Haight,  53  Wis.  260,  10  N.  W. 
378.     Where  R.  owned  and  was  running  one  steamboat,  and  D.  owned  and  was 


§    15)  SHARING  BOTH  PROFITS  AND  LOSSES.  65 

'T.  take  it,"  said  Cotton,  L.  J.,  in  Ex  parte  Tennant,***  "the  law  is 
this:  That  participation  in  profits  is  not  now  conclusive  evidence 
of  the  existence  of  a  partnership,  but  it  is  one  of  the  circumstances, 
and  a  very  strong  one,  which  are  to  be  taken  into  consideration  for 
the  purpose  of  seeing  whether  or  not  a  partnership  exists, — that  is 
to  say,  whether  there  was  a  joint  business;  or,  putting  it  in  another 
way,  whether  the  parties  were  carrying  on  the  business  as  principals 
and  agents  for  each  other, — whether  it  is  a  joint  business  or  the 
business  of  one  only."  If  the  whole  facts  show  that  the  person 
sought  to  be  charged  authorized  the  carrying  on  of  the  business  on 
account  and  for  the  benefit  of  himself,  then  he  is  liable  as  a  partner 
would  be,  and  he  can  no  more  avoid  responsibility  to  third  per- 
sons by  showing  that  he  had  stipulated  with  the  ostensible  partners 
that  he  should  not  be  liable  for  the  debts  of  the  firm  than  could  any 
other  concealed  principal,  by  stipulations  with  his  own  agent,  avoid 
liability  to  third  parties  on  contracts  effected  by  that  agent  on  his 
behalf,  within  the  authority  given  by  him.  But  it  is  obvious  that 
it  is  almost  impossible  to  define  accurately  what  are  the  states  of 
circumstances  which  establish  the  relations  in  this  sense  of  prin- 
cipal and  agent.  Capital  embarked,  powers  of  interference  in  the 
business,  profits  received,  are  all  circumstances  to  be  taken  into  con- 
sideration in  deciding  the  question.^"*" 

15.  SHARING  BOTH  PROFITS  AND  liOSSES— Proof  of 
an  agreement  to  share  both  profits  and  losses  is 
sufiB.cient  to  sho^w  a  partnership  prima  facie. 

Where  the  agreement  is  to  own  and  carry  on  a  business  jointly, 
and  to  share  in  the  profits  and  losses  because  they  do  own  it,  the 
parties  are  partners,  as  a  matter  of  law,  because  they  have  done  the 

running  another,  and  it  was  agreed  between  tliem  that  at  the  end  of  the  season 
of  navigation,  if  the  earnings  of  either  boat,  less  running  expenses,  should  exceed 
those  of  the  other,  less  running  expenses,  the  excess  should  be  divided  between 
them,  held  this  did  not  make  them  partners  in  running  the  boats.  Fay  v. 
Davidson,  13  Minn.  523  (Gil.  491).  Cf.  Connolly  v.  Davidson,  15  Minn.  519 
(Gil.  428). 

140  6  Ch.  Div.  303,  315. 

iBO  Waugh  V.  Carver,  1  Smith,  Lead.  Cas.  (8th  Ed.)  1331. 


56  DEFINITION    AND   ESTABLISHMENT   OF    RELATION.  (Ch.    1 

very  thing  which  the  law  defines  as  a  partnership.  Usually,  how- 
ever, the  agreement  is  not  so  full  and  complete,  and  the  intention 
is  not  so  clearly  expressed.  In  such  cases  the  intention  must  be 
ascertained  from  all  the  acts  and  circumstances  of  the  parties,  and 
various  tests  have  been  suggested.  Thus,  it  has  been  said  that  an 
agreement  to  share  both  the  profits  and  the  losses  is  sufficient  to 
render  the  parties  partners.*"^  Lindley  says  that  he  is  not  aware 
of  any  case  in  which  persons  who  have  agreed  to  share  profits  and 
losses  have  been  held  not  to  be  partners.^'''     Cases  where  the  fact 

»"  Lindl.  Partn.  p.  10.  And  see  Scott  t.  Campbell,  30  Ala.  728.  Where  two 
parties  purcliase  and  conduct  a  business  under  an  agreement  to  share  in  the 
profits  and  losses,  they  are  partners.     Martin  v.  Cropp,  1  Mo.  App.  Itcp'r,  438. 

152  Lindl.  Partn.  p.  10.  Grinton  v.  Strong,  148  111.  587,  36  N.  E.  559,  is  such 
a  case.  See,  also.  Walker  v.  Hirsch,  27  Ch.  Div.  460;  Badeley  ▼.  Bank,  38  Ch. 
Div.  238;  Marsh  v.  Insurance  Co.,  3  Biss.  351,  Fed.  Cas.  No.  9,118;  Snell  v. 
De  Land,  43  111.  323;  Monroe  v.  Greenhoe,  54  Mich.  9,  19  N.  W.  509;  Clifton  v. 
Howard,  89  Mo.  192,  1  S.  W.  26;  Osbrey  v.  Reimer,  51  N.  Y.  630;  Chapline  r. 
Conaut,  3  W.  Va.  507.  Where  money  is  advanced  under  a  deed  to  a  person  en- 
gaged, or  about  to  be  engaged,  in  business,  the  mere  fact  that  it  has  been  agreed 
that  the  lender  shall  participate  in  the  profits  and  losses  is  not  of  itself  con- 
clusive of  partnership,  if  it  appears  from  the  deed  as  a  whole  that  it  was  not 
the  intention  of  the  parties  to  create  a  partnership  between  them.  King  v. 
Whichelow,  64  Law  J.  Q.  B.  801.  Prof.  Ames  criticises  this  statement  of  Mr. 
Lindley.  In  a  note  to  his  cases  on  Partnership  (page  124)  he  says:  "But  this 
statement,  it  is  conceived,  is  much  too  sweeping.  An  agreement  to  share  profits 
and  losses  creates  a  strong,  but  not  conclusive,  presumption  of  a  partnership  be 
tween  the  parties,  as  appears  from  the  following  authorities:  Moore  v.  Davis, 
11  Ch.  Div.  201  (semble);  Stevens  v.  Faucet,  24  111.  483;  Cbaflraix  v.  Price,  29 
La.  Ann.  176;  Dwinel  v.  Stone,  30  Me.  384  (semble);  Howe  v.  Howe,  99  Mass. 
71  (semble);  Donnell  v.  Ilarshe,  67  Mo.  170;  Musser  v.  Brink,  68  Mo.  242 
(semble);  Osbrey  v.  Reimer,  49  Barb.  265.  •  *  •  But  see  Scott  v.  Campbell, 
80  Ala.  728;  Getchell  v.  Foster,  106  Mass.  42  (semble),  contra.  But  see  Marsh 
V.  Insurance  Co.,  3  Biss.  351,  Fed.  Cas.  No.  9,118;  Fawcett  v.  Osborn,  32  111.  411 
(and  see  Stevens  v.  Faucet,  24  111.  483);  Snell  v.  De  Land,  43  111.  323  (semble); 
Chaffraix  v.  Price,  29  La.  Ann.  176;  Chafifraix  v.  Lafitte,  30  La.  Ann.  631;  Fay 
V.  Davidson,  13  Minn.  523  (Gil.  491)  (but  see  Connolly  v.  Davidson,  15  Minn. 
619  [Gil.  428]);  Chapline  v.  Conant,  3  W.  Va.  507,— in  all  of  which  cases  it  was 
held  that  A.  was  not  liable  as  a  partner  with  B.  to  third  persons,  although  he 
was  to  share  profits  and  losses  with  B., — contra.  In  Noakes  v.  Barlow,  26  Law 
T.  (N.  S.)  136,  Blackburn,  J.,  said  (page  139):  'If  the  question  in  this  case 
had  depended  on  the  simple  question  whether  sharing  in  profits  and  losses  con 
Btituted  a  partnership  so  as  to  authorize  one  party  to  pledge  the  other's  credit,  1 


§    15)  SHARING  BOTH  PROFITS  AND  LOSSES,  67 

of  partnership  comes  into  dispute  are  certainly  rare,  where  the  par- 
ties have  unquestionably  so  agreed.  It  is  usually  in  the  absence  of 
the  admitted  fact  of  an  agreement  to  share  losses  that  the  question 
arises.  But  an  agreement  to  share  the  profits  and  losses  of  a  busi- 
ness certainly  does  not  necessarily  make  the  persons  so  agreeing 
joint  owners  in  the  profits.^  "^  It  is  therefore  not  conclusive  of  the 
fact  of  partnership,  and  it  may  be  shown  that  the  profits  and  losses 
were  to  be  shared  on  some  other  basis,  and  for  some  other  reason, 
than  because  the  parties  are  the  joint  proprietors  of  the  business.^ ^* 
But,  in  the  absence  of  evidence  as  to  the  real  basis  on  which  profits 
and  losses  were  to  be  shared,  it  is  a  fair  inference  that  persons  who 
have  so  agreed  are  joint  proprietors  of  the  business  and  profits,  or,  in 
other  words,  are  partners-^^"* 

should  have  thought  the  direction  right;  as,  since  the  decision  in  Cox  t.  Hick- 
man [8  H.  L.  Cas.  26SJ  it  has  been  the  law  that  sharing  in  profits  and  losses  does 
not  in  itself  constitute  a  partnership,  but  only  affords  a  strong  presumption  that 
the  one  party  is  made  the  agent  for  the  other.'  See,  also,  Kilshaw  v.  Jukes,  3 
Best  &  S.  847." 

IBS  It  requires  something  more  than  mere  participation  in  profits  and  losses 
to  constitute  a  partnership.  Gilpin  v.  Enderbey,  5  Barn.  &  Aid.  954;  Bucknam  v. 
Barnum,  15  Conn.  67;  Rankin  v,  Fairley,  29  Mo.  App.  587;  Newberger  v. 
Friede,  23  Mo.  App.  631,  Kelly  v.  Gaines,  24  Mo.  App.  506;  Butler  v.  Merrick, 
24  111.  App.  628.  Such  participation  must  be  because  the  parties  stand  in  the 
relation  of  principal  proprietors  of  the  business.  Flower  v,  Barnekoff,  20  Or. 
137,  25  Pac.  370;  Spaulding  v.  Stubbings,  86  Wis.  255,  56  N.  W.  469;  Boston 
&  C.  Smelting  Co.  v.  Smith,  13  R.  I.  27;  Clifton  v.  Howard,  89  Mo.  192,  1  S. 
W.  26;  Somerby  v.  Buntin,  118  Mass.  279;  Duryea  v.  Whitcomb,  31  Vt.  395; 
Morse  v.  Richmond,  97  111.  303.  "Where  it  appears  that  there  is  a  community 
of  interest  in  the  capital  stock,  and  also  a  community  of  interest  in  the  profit 
and  loss,  then  It  is  clear,  and  actual  partnership  exists  between  the  parties." 
Flower  v.  Barnekoff,  20  Or.  132,  144,  25  Pac.  370,  374;  citing  Berthold  v.  Gold- 
smith, 24  How.  536.  "If  A.  agree  with  B.  to  share  profits  and  losses,  but  not 
to  interfere  with  the  business,  and  not  to  buy  nor  sell,  and  does  not  interfere  nor 
buy  nor  sell,  and  C,  knowing  this,  deals  with  B.,  he  would  have  no  claim  on  A. 
Why  should  he,  if  he  does  not  know  of  it?"  Per  Bramwell,  B.,  in  Bullen  v. 
Sharp,  L.  R.  1  C.  P.  86,  125. 

164  Bates,  Partn.  §  29.  See  Kilshaw  v.  Jukes,  3  Best  &  S.  847;  Bullen  v. 
Sharp,  L.  R.  1  C.  P.  86;  Ex  parte  Delhasse,  7  Ch.  Div.  511;  Smith  v.  Wright, 
5  Sandf.  113.  Subpartnerships  are  a  class  of  cases  in  which  there  is  a  sharing 
of  profits  and  losses,  but  no  partnership.      See  post,  p.  79. 

18B  "If  one  person  is  to  furnish  the  property  or  the  money  with  which  to  pro- 
cure it,  and  the  other  is  to  give  his  services  in  disposing  of  it  under  an  agree- 


68  DEFINITION    AKD    ESTABLISHMENT    OF    RELATION.  (Ch.   1 

16.  SHARING    PROFITS    ONLY— Partnership    is  prima 

facie  the  result  of  an  agreement  to  share  profits, 
although  nothing  may  be  said  about  losses,  and  al- 
though there  may  be  no  common  stock. 

17.  Partnership    is    prima   facie  the  result   of    an    agree- 

ment to  share  profits,  although  community  of  loss 
is  stipulated  against. 

Where  an  agreement  between  two  or  more  persons  merely  pro- 
vides that  a  business  shall  thereafter  be  conducted  by  one  or  more 
of  them,  and  the  profits  divided  between  them  all,  although  noth- 
ing is  said  about  losses,  the  most  natural  inference  is  that  all  the 
parties  are  to  be  joint  owners  of  the  profits.  Accordingly,  a  part- 
nership is  the  prima  facie  result  of  such  an  agreement.**'    If  the 

ment  by  which  they  are  to  divide  profit  and  loss,  it  is  a  partnership  inter  se,  for 
a  sharing  of  loss  is  generally  inconsistent  with  a  mere  employment."  Bates, 
Partn.  §  28,  citing,  inter  alia,  Pawsey  v.  Armstrong,  18  Ch.  Div.  698;  Olark  t. 
Gridley,  49  Cal.  105;  Sprout  v.  Crowley,  30  Wis.  187.  But  see  Newberger  v. 
Friede,  23  Mo.  App.  631.  In  Duryea  v.  Whitcomb,  31  Vt.  395,  there  was  an 
agreement  to  share  both  profits  and  losses.  The  court  said:  "As  the  contract 
imports  a  partnership,  we  must  hold,  in  the  absence  of  any  express  stipulation, 
and  of  any  other  circumstances  to  show  the  contrary,  that  they  intended  to 
create  the  relation  which  the  contract  expresses."  See,  also,  Morse  v.  Richmond, 
97  111.  303;  Pierce  v.  Shippee,  90  111.  371;  Marsh  v.  Russell,  66  N.  Y.  288; 
Meaher  v.  Cox,  37  Ala.  201;  Stevens  v.  Faucet,  24  111.  483;  Osbrey  v.  Reimer, 
51  N.  Y.  630;  Edwards  v.  Tracy,  62  Pa.  St.  374;  McDonald  v.  Matney,  82  Mo. 
358;  Clifton  v.  Howard,  89  Mo.  192,  1  S.  W.  26;  Dwinel  v.  Stone,  30  Me.  884; 
Bullen  V.  Sharp,  L.  R.  1  C.  P.  86;  Ex  parte  Delhasse,  7  Ch.  Div.  511,  521;  Green 
T,  Beasley,  2  Bing.  N.  C.  108. 

1B6  Lindl.  Partn.  p.  12.  An  agreement  between  two  persons  to  share  the  profits 
of  a  business  is,  inter  se,  prima  facie  proof  only  that  they  are  partners.  Kootz 
V.  Tuvian  (N.  C.)  24  S.  E.  776.  "I  think  it  may  be  taken  as  established  by  the 
authorities  that,  in  the  absence  of  something  in  the  contract  to  show  a  contrary 
intention,  the  right  to  share  profits  as  profits  constitutes,  according  to  English  law, 
a  partnership.  1  cannot  find,  as  far  as  I  can  see,  a  single  authority  which  con- 
flicts with  that  proposition."  Pooley  v.  Driver,  5  Ch.  Div.  458,  470.  A  con- 
tract under  which  two  persons  are  to  share  the  profits  of  a  business,  but  which 
fails  to  provide  for  a  sharing  of  the  losses,  does  not  constitute  a  partnership  inter 
se.  Winter  v.  Pipher  (Iowa)  64  N.  W.  663.  To  constitute  a  partnership  there 
must  be  an  agreement  to  share  not  only  in  the  profits  of  a  joint   venture,  but  in 


§§    16-17)  SHARING  PROFITS   ONLY.  69 

contract  further  provide  that  losses  shall  likewise  be  shared  by 
all,  the  inference  that  a  partnership  was  intended  is  strengthened, 
because,  as  will  be  seen,  liability  for  losses  is  one  of  the  incidents 
of  a  partnership. ^"^^  But,  even  where  nothing  is  said  as  to  losses, 
the  presumption  that  a  partnership  was  intended  remains,  in  the 
absence  of  anything  to  show  that  the  profits  were  to  he  shared  on 
some  other  basis  than  that  of  joint  ownership.^"'    In  other  words, 

the  losses  as  well.  McBride  v.  Kicketts  (Iowa)  67  N.  W.  410.  These  last  cases 
go  too  far.  Mayrant  v.  Marston,  67  Ala.  453.  It  is  not  necessary,  in  order  to 
constitute  a  partnership,  that  there  be  an  express  agreement  that  each  party 
shall  bear  a  share  of  any  losses  which  may  occur  in  the  business.  This  may  be 
inferred  from  the  other  provisions  of  the  contract,  and  the  nature  of  the  business, 
and  the  relation  of  parties  to  the  business  to  be  transacted.  Richards  v.  Grinnell, 
63  Iowa,  44,  18  N.  W.  668.  Except  in  cases  specially  provided  for  by  statute, 
an  agreement  to  share  profits,  nothing  being  said  about  losses,  amounts  prima 
facie  to  an  agreement  to  share  losses  also.  It  follows  from  this  that,  where  no 
statute  interferes,  an  agreement  to  share  profits  is  prima  facie  an  agreement  for 
a  partnership.  Illingworth  v.  Parker,  62  111.  App.  650.  An  agreement,  indefinite 
aa  to  its  continuance,  which  provides  for  the  selling  on  commission,  or  the  purchase 
and  sale  at  a  profit,  of  several  tracts  of  land,  the  deduction  from  the  net  profits, 
whether  money  or  land,  of  the  expenses  incurred,  and  a  division  of  these  profits 
equally  between  the  parties,  each  of  whom  is  to  use  his  time  and  skill  to  effect  the 
sale  or  sales,  renders  such  parties  partners,  though  no  agreement  was  made  as  to 
sharing  the  losses;  and  either  is  entitled  to  an  account  in  equity  to  ascertain  the 
result  of  the  enterprise.     Jones  v.  Murphy  (Va.)  24  S.  E.  825. 

167  See  post,  p.  235. 

iBSHeyhoe  v.  Burge,  9  C.  B.  440;  Dry  v.  Boswell,  1  Camp.  330;  Chester  v. 
Dickerson,  54  N.  Y.  1;  Manhattan  Brass  &  Manufg  Co.  v.  Sears,  45  N.  Y.  797; 
Sheridan  v.  Medara,  10  N.  J.  Eq.  460;  Harvey  v.  Childs,  28  Ohio  St.  319;  Lengle 
V.  Smith,  48  Mo.  276.  "TTie  rule  is  well  settled  that  whenever  a  person  becomes 
entitled  to  an  actual  participation  in  the  profits  of  the  joint  business  as  profits, 
so  as  to  entitle  him  to  an  account,  and  give  him  a  specific  lien  on  the  partnership 
assets  for  payment  of  his  share  of  the  profits,  in  preference  to  the  creditors  of  the 
individual  partners,  he  becomes  a  partner  as  to  creditors  of  the  firm,  although  it 
may  be  expressly  agreed  between  them  that  he  shall  not  be  so  considered.  The 
members  of  a  firm  cannot  enjoy  all  the  benefits  of  a  partnership,  and,  by  secret 
agreement  among  them  that  they  shall  not  be  so  considered,  exempt  themselves 
from  the  liabilities  that  flow  from  the  relation.  But,  if  the  profits  are  taken  in 
the  character  of  an  agent  or  servant  as  a  mere  compensation  for  services,  and  the 
party  is  so  held  out  to  the  world,  he  is  not,  even  as  to  creditors,  held  to  be  a  part- 
ner." Voorhees  v.  Jones,  29  N.  J.  Law,  270.  For  other  cases  of  joint  owner- 
ship, see  Richards  v.  Grinnell,  63  Iowa,  44,  18  N.  W.  668;  Tyler  v.  Scott,  45  Vt. 
261;    Citizens'  Nat.  Bank  v.  Hine,  49  Conn.  236;    Sankey  v.  Columbus  Iron  Works, 


60  DEFINITION   AND    ESTABLISHMENT    OP    RELATION.  (Cb     1 

the  sharing  of  profits  is  merely  a  prima  facie,  and  not  a  conclusive, 
test  of  partnership.  The  parties  may  show  that  the  profits  were  to  be 
shared  in  some  other  right."^  The  intention  of  the  parties,  as  gath- 
ered from  the  whole  contract  and  the  surrounding  circumstances, 
controls.""     Thus,  where  a  father  paid  a  sum  of  money  as  his  in- 

44  Ga.  228;  Hill  v.  Sheibley,  68  Ga.  566;  Staples  v.  Sprague,  75  Me.  458;  Doak 
V.  Swann,  8  Me.  170.  For  cases  where  there  was  no  joint  ownership,  see  Morrison 
V.  Cole,  SO  Mich.  102;  Dwinel  v.  Stone,  30  Me.  384;  Bull  v.  Schuberth,  2  Md. 
38;  Flint  v.  Marble  Co.,  53  Vt,  669;  Parker  v.  Fergus,  43  111.  437;  McArthur  v. 
Ladd,  5  Ohio.  514;  Cassidy  v.  Hall.  97  N.  Y.  159;  Prouty  v.  Swift,  51  N.  Y.  594; 
Ashby  V.  Shaw,  82  Mo.  76;    Ford  v.  Smith,  27  Wis.  261. 

X89  "The  way  in  which  the  profits  are  to  be  shared  is  the  essence  of  the  mat- 
ter, and  when  the  right  to  profits  arises  by  virtue  of  an  express  contract,  and  does 
not  flow  from  the  relations  of  the  parties,  the  right  exists  qua  debt,  and  not  by 
virtue  of  a  partnership."  Lindl.  Partn.  (Wentw.  Ed.)  p.  13,  note  2.  See,  also, 
Loomis  V.  Marshall,  12  Conn.  69;  Brown  t.  Jaquette,  94  Pa.  St.  113;  Pleasants 
V.  Fant,  22  Wall.  116.  The  receipt  of  a  share  of  profits  in  a  business  is,  under 
section  2,  subsec.  3,  Partnership  Act  1890,  prima  facie  evidence  of  a  partnership. 
This  may,  however,  be  rebutted  by  a  consideration  of  the  whole  of  the  circum- 
stances of  each  case.  Badeley  v.  Bank,  38  Ch.  Div.  238,  considered.  Davis  v. 
Davis,  8  Reports,  133;  Id.  L1894J  1  Ch.  3l>3.  The  interest  of  each  in  the  profits 
must  be  as  a  principal  in  the  joint  business  with  a  community  of  interest  in  the 
profits  as  such.  Where  one  purchased  one-fourth  of  the  profits  of  a  partnership, 
to  be  ascertained,  that  did  not  make  him  a  partner.  Parchen  v.  Anderson,  5 
Mont.  438,  5   Pac   588. 

160  The  coincidence  of  a  joint  capital  and  a  sharing  of  the  profits  raises  a  strong 
presumption  that  the  parties  intended  a  community  of  interest  in  the  profits, 
and  therefore  that  a  partnership  exists.  In  the  absence  of  anything  to  show  a 
contrary  intention,  this  presumption  would  be  conclusive.  Bates,  Partn,  §  31. 
Most  cases  of  true  partnerships  fall  under  this  class.  See  Ward  v.  Thompson, 
22  How.  330;  Doak  v.  Swann,  8  Me.  170;  Barrett  v.  Swann,  17  Me.  180;  Staples 
V.  Sprague,  76  Me.  458;  Richards  v.  Grinnell,  63  Iowa,  44,  18  N.  W.  668; 
Griffith  v.  Buffum,  22  Vt.  181.  See  cases  cited  to  illustrate  development  of  mod- 
ern doctrine,  ante,  p.  34  et  soq.  Where  one  partner  furnishes  all  the  capital,  and 
the  other  services,  the  parties  will  be  held  partners,  unless  a  contrary  intention 
be  made  to  appear.  Pooley  v.  Driver,  5  Ch.  Div.  458;  Kobbins  v.  Laswell,  27 
111.  365;  Ruckman  v.  Decker,  23  N.  J.  Eq.  283;  Ryder  v.  Wilcox,  103  Mass.  24; 
W^right  V.  Davidson,  13  Minn.  449  (Gil.  415);  Lengle  v.  Smith,  48  Mo.  276. 
Where  an  intention  not  to  be  co-owners  is  shown,  and  the  profits  are  shared  for 
some  other  reason,  there  is  no  partnership.  See  cases  cited  ante,  note  134,  and 
"Profits  Shared  as  Compensation,"  post,  note  162.  Also  Stevens  v.  Faucet,  24  111. 
483.  "This  rule  is,  however,  imperfect,  since  the  difficulty  sometimes  arises  to 
determine  whether  the  business  is  owned  by  both,  and  since  joint  ownership  may 


§§    16-17)  SHARING  PROFITS  ONLY.  61 

fant  son's  share  of  the  capital  of  the  partnership,  and  it  was  agreed 
that  during  the  son's  minority  the  profits  should  be  accounted  for 
to  the  father,  it  was  held  that  the  father  was  not  himself  a  partner, 
that  clearly  not  being  the  intention  of  the  parties  totheagreement.^*^ 
Other  illustrations  of  the  same  principle  are  afforded  by  those  cases 
in  which  managers,  clerks,  agents,  etc.,  are  paid  salaries  proportion- 
ate to  the  profits  of  the  business  in  which  they  are  employed.  No 
partnership  subsists  between  persons  thus  paid,  and  those  who  pay 
them,  where  it  appears  from  the  whole  agreement  that  a  partnership 
was  not  intended,  or,  in  other  words,  where  the  profits  were  not 
shared  because  of  community  of  ownership  in  them.^*^  If,  however, 
a  servant  sharing  profits  has  also  an  interest  in  the  partnership, 
capital,  or  stock,  this  additional  circumstance  goes  far  to  show  that 
a  partnership  was,  in  fact,  intended.^*' 

be  inferred  as  a  consequence  quite  as  well  as  a)  cause  of  sharing  profits  as  part- 
ners." Bates,  Partn,  §  35.  In  the  case  of  an  alleged  lending,  any  power  of  con- 
trol vested  in  the  lender  may  turn  the  scale  in  favor  of  a  partnership.  See  Mollwo 
V.  Court  of  Wards,  L.  R.  4  P.  C.  419;  Pooley  v.  Driver,  5  Ch.  Div.  458;  Ma- 
govern  V.  Robertson,  116  N.  Y.  61,  22  N.  E.  398;  Hackett  v.  Stanley,  115  N.  Y. 
625,  22  N.  E.  745;  Richardson  v.  Hughitt,  76  N.  Y.  55;  Leggett  v.  Hyde,  58 
N.  Y.  272;  Waverly  Nat  Bank  v.  Hall,  150  Pa.  St  466,  24  Atl.  665.  Generally, 
as  to  effect  of  right  of  control,  see  Clark  v.  Smith,  52  Vt.  529;  Braley  v.  Goil- 
dard,  49  Me.  115;  Dwinel  v.  Stone,  30  Me.  384;  Voorhees  v.  Jones,  29  N.  .7. 
Law,  270;  Ashby  v.  Shaw,  82  Mo.  76;  Conklin  v.  Barton,  43  Barb.  (N.  Y.)  435; 
Hunt  V.  Erikson,  67  Mich.  330.  23  N.  W.  832.  Cf.  Meador  v.  Hughes,  14  Bush 
(Ky.)  652. 

i«i  Barklie  v.  Scott.  1  Hiids.  &  B.  83. 

162  Ex  parte  Tennant,  6  Ch.  Uiv.  303;  Ross  v.  Parkyns,  L.  R.  20  Eq.  331; 
Rawlinsou  v.  Clarke,  15  Mees.  &  W.  292;  Burton  v.  Goodspeed,  69  111.  237; 
Smith  V.  Bodine,  74  N.  Y.  30;  Burckle  v.  Eckart,  1  Denio  (N.  Y.)  338;  Vinson  v. 
Beveridge,  3  McArthur,  597;  Coffin  v.  Jenkins,  3  Story,  108,  Fed.  Cas.  No.  2,948; 
Meserve  t.  Andrews,  104  Mass.  360;  Morrison  v.  Cole,  30  Mioh..  102;  Hall  v. 
Edson,  40  Mich.  651;  Hamper's  Appeal,  51  Mich.  71,  16  N.  W.  236;  Morgan 
V.  Farrel,  58  Conn.  414,  20  Atl.  614;  Pond  v.  Cummins,  50  Conn.  372;  Hitchings 
V.  Ellis,  12  Gray  (Mass.)  449;  Knddick  v.  Otis,  33  lowa^  402;  Perry  v.  Smith, 
29  N.  J.  Law,  74;  Nutting  v.  Colt.  7  N.  J.  Eq.  539;  Shepard  v.  Pratt,  16  Kan. 
209;  Sodiker  v.  Applegate,  24  W.  Va.  411;  Whitehill  v.  Shickle,  43  Mo.  538;  Dale 
v.  Pierce,  85  Pa.  St.  474;  Waverly  Nat.  Bank  v.  Hall,  150  Pa.  St.  466,  24  Atl. 
665;  Boston  &  C.  Smelting  Co.  v.  Smith,  13  R.  I.  27;  Beecher  v.  Bush,  45  Mich. 
188,  7  N.  W.  785;    Parchen  v.  Anderson,  5  Mont.  438,  5  Pac.  588. 

103  See  Hackett  v.  Stanley,  115  N.  Y.  6£i5,  22  N.  E.  745;    Magovern  v.  Robert 


62  DEFINITION    AND    ESTABLISHMENT    OF    BELATION.  (Ch.   1 

Partnerships  in  Profits  Only. 

It  is  not,  however,  essential  to  the  existence  of  a  partnership,  that 
there  shall  be  any  joint  capital  or  stock.^"*  If  several  persons  labor 
together  for  the  sake  of  gain,  and  of  dividing  that  gain,  they  will 
not  be  partners  the  less  on  account  of  their  laboring  with  their  own 
tools.^"  Thus,  in  Fromont  v.  Coupland,^"  two  persons  who  horsed 
a  coach,  and  divided  the  profits,  were  held  to  be  partners,  although 
each  found  his  own  horses,  and  the  other  had  no  property  in  them. 
So,  in  French  v.  Styring,^'^  where  two  co-owners  of  a  race  horse 
agreed  to  share  its  winnings  and  the  expenses  of  its  keep,  although 
there  was  some  doubt  as  to  whether  they  were  partners  or  not,  the 
court  had  no  hesitation  in  admitting  that  they  might  have  been 
partners  in  the  profits,  although  not  in  the  horse  itself.  Again, 
it  frequently  happens  that  one  person  has  property,  and  another 
skill,  and  that  they  agree  that  the  latter  shall  have  the  control 
of  the  property  for  the  benefit  of  both,  and  that  the  profits  shall  be 
divided.  In  such  cases  it  may  be  difficult  to  say  whether  a  part- 
nership is  or  is  not  created.^"'  In  Stocker  v.  Brockelbank,^"  it  is 
clear  that  no  partnership  was  intended,  and  none  was  created.  In 
the  case  of  Greenham  v.  Gray,^^°  it  was  thought  that  the  whole 
agreement  could  only  receive  a  reasonable  construction  by  holding 
a  partnership  to  exist,  and  a  partnership  was  held  to  exist  accord- 
ingly, although  the  mills  and  machinery  and  buildings  by  means  of 
which  the  business  was  carried  on  clearly  belonged  to  one  partner 
only. 

Stipulations  against  Community  of  Loss. 

The  inference  that,  where  there  is  community  of  profit,  there  Is 
a  partnership,  is  so  strong  that,  even  if  community  of  loss  be  ex- 
eon,  116  N.  Y.  61,  22  N.  E,  298;  Spaulding  v.  Stubbings,  86  Wis.  255,  56  N.  W. 
469;    Sawyer  v.  Bank,  114  N.  C.  13,  18  S.  E.  949. 

16*  As  instances  of  partnerships  in  profits  only,  see  Stevens  v.  Faucet,  24  III. 
483;    Robbins  v.  Laswell,  27  111.  365. 

165  Lindl.  I'artn.  p.  14. 

i««  2  Blng.  170.     See,  also,  JLovegrove  v.  Nelson,  3  Mylne  &  K.  1. 

167  2  C.  B.  (N.  S.)  357. 

168  See  cases  cited  supra,  note  162,  "Profits  Shared  as  Compensation."  See 
also,  Reynolds  v.  Pool,  84  N.  C.  37;  Holt  v.  Kemodle,  1  Ircd.  (N.  C.)  199;  Bean 
regard  v.  Case,  91  U.  S.  134;    Stroher  v.  Elting,  97  N.  Y.  102. 

i«»3  Macn.  &  G.  260.  iTo  4  ir.  C.  L.  501. 


§    18)  SHARING  GROSS  RETURNS.  63 

pressly  stipulated  against,  partnership  may,  nevertheless,  subsist. 
Persons  who  have  so  agreed  are  prima  facie  partners.^ ^^  In  Coope 
V.  Eyre,^^'  Lord  Loughborough  is  reported  to  have  said:  *1n  order 
to  constitute  a  partnership,  communion  of  profits  and  loss  is  es- 
sential." But  there  is  nothing  to  prevent  one  or  more  partners  from 
agreeing  to  indemnify  the  others  against  loss,  or  to  prevent  full 
effect  from  being  given  to  a  contract  of  partnership  containing  such 
a  clause  of  indemnity.^ ''^  Third  persons  are  not  concerned  with 
such  an  agreement,  and,  as  to  them,  the  parties  being  really  part- 
ners inter  se,  are  all  primarily  liable.*^* 

18.  SHARING     GROSS     RETURNS— Partnership    is    not 
the  result  of  an  agreement  to  share  gross  returns. 

It  is  well  established  that  an  agreement  to  share  gross  returns 
does  not  create  a  partnership.^^'    It  has  just  been  seen  that  prima 

iTi  Lindl.  Partn.  p.  15.  An  agreement  whereby  one  party  is  to  furnish  the 
capital  necessary  to  carry  on  the  business,  is  to  share  equally  in  the  profits,  and, 
in  case  of  loss,  is  gruarantied  the  return  of  his  investment,  does  not  constitute  the 
parties  partners,  hence  the  rule  of  interest  on  overdrafts  under  partnership  agree- 
ments does  not  apply.  Orvis  v.  Curtiss,  12  Misc.  Kep.  434,  33  N.  Y.  Supp.  589. 
For  cases  involving  agreements  against  losses,  see  Bond  t.  Pittard,  3  Mees.  & 
W.  357;  Walden  v.  Sherburne,  15  Johns.  (N.  Y.)  409;  Gilpin  v.  Enderbey,  5  Barn. 
&  Aid.  954;  Brown  v.  Tapscott,  6  Mees.  &  W.  119.  See,  also.  Priest  v.  Chou- 
teau, 85  Mo.  398;  Richards  v.  GrinneU,  63  Iowa,  44,  18  N.  W.  GU8;  Berthold 
V.  Goldsmith,  24  How.  536;  Pollard  v.  Stanton,  7  Ala.  761;  McKasy  t.  Huber 
(Minn.)  67  N.  W.  650. 

172  1  H.  Bl.  48. 

"8  Bond  V.  Pittard,  3  Mees.  &  W.  357;    Geddes  v.  Wallace,  2  Bllgh,  270. 

174  Everitt  v.  Chapman,  6  Conn.  847. 

176  "The  sharing  of  gross  returns  with  or  without  a  common  interest  in  property 
from  which  the  returns  come  does  not  of  itself  create  any  partnership."  Pol. 
Partn.  p.  5;  illustrating  the  principle  by  Lyon  v.  Knowles,  3  Best  &  S.  556.  Such 
an  agreement  did  not  create  a  partnership  as  to  third  persons,  even  as  the  law 
stood  prior  to  Cox  t.  Hickman,  when  it  was  held  that  a  mere  agreement  to  share 
profits  created  a  partnership  as  to  third  persons.  The  sharing  of  "gross  profits" 
has  never  been  regarded  as  any  evidence  of  partnership.  Wilkinson  v.  Frasier, 
4  Esp.  182;  Dry  v.  Boswell,  1  Camp.  329;  Chapman  v.  Eames,  67  Me.  452; 
Bowman  v.  Bailey,  10  Vt.  170;  Loomis  v.  Marshall,  12  Conn.  69;  Cutler  v.  Win- 
sor,  6  Pick.  (Mass.)  335;  Turner  v.  Bissell,  14  Pick.  (Mass.)  192;  Merrick  v. 
Gordon,  20  N.  Y.  93;    Butterheld  v.  Lathrop,  71  Pa.  St-  225;    Champion  v.  Bost- 


64  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

facie  an  agreement  to  share  profits  does  result  in  a  partnership. 
It  is  obvious  that  an  important  distinction  exists  between  the  terms 
"profits"  and  "gross  returns."  Profits  are  the  excess  of  returns 
over  advances;  the  excess  of  what  is  obtained  over  the  cost  of  ob- 
taining it.  Losses,  on  the  other  hand,  are  the  excess  of  advances 
over  returns;  the  excess  of  the  cost  of  obtaining  over  what  is  ob- 
tained. The  expressions  "net  profits"  and  "gross  profits"  are  met 
with  in  the  books,  but  they  are  inaccurate.  "Profits"  and  "net 
profits"  are,  for  all  legal  purposes,  synonymous  expressions.  All 
profits  are  necessarily  net,  and  no  profits  can  possibly  be  gross.  But 
the  term  "gross  profits"  is  sometimes  used  to  designate  the  re- 
turns. This  use  of  the  term,  however,  is  inaccurate.  A  business  is 
susceptible  of  "gross  returns"  and  "net  returns,"  and  "profits"  is  the 
synonym  of  "net  returns."  The  distinction  between  profits,  on  the 
one  hand,  and  gross  returns,  on  the  other,  is  obvious. 

An  agreement  to  share  gross  returns  does  not  create  a  partnership, 
for  the  reason  that  such  an  agreement  is  inconsistent  with  the  joint 
ownership  of  the  profits.  In  a  partnership  the  profits  are  shared 
because  the  partners  are  joint  owners  of  them.  If  no  profits  have 
been  made,  no  partner  is  entitled  to  any  share  as  against  the  others, 
for  there  is  nothing  to  share.  But,  where  the  agreement  is  to  share 
gross  returns,  the  share  is  independent  of  the  existence  of  profits, 
and  may  be  taken  when  there  is  a  loss.  It  necessarily  follows  that 
an  agreement  to  share  gross  returns  creates  a  debt  between  the 
parties,  and  not  a  joint  proprietorship  in  the  profits.     "Though  the 

wick,  18  Wend.  (N.  Y.)  175;  Futnam  v.  Wise,  1  Hill  (N.  Y.)  '2M;  Irvin  v.  Rail- 
way Co.,  92  111.  103;  Goell  v.  Morse,  126  Mass.  480;  La  Mont  v.  Fullam,  133 
Mass.  583;  Cutler  v.  Winsor,  tj  Pick.  (Mass.)  335;  Beecher  v.  Bush,  45  Mich. 
K8,  7  N.  W.  785;  Eastman  v.  Clark,  53  N.  H.  276;  Quackenbush  v.  Sawyer,  54 
Cal.  439;  Miles  Co.  v.  Gordon,  8  Wash.  442,  36  Pac.  265;  Day  v.  Stevens,  88  N. 
C.  83;  Reynolds  v.  Pool,  84  N.  C.  37;  rulliam  v.  Schimpf,  100  Ala.  362,  14  South. 
488;  Nelms  v.  McGraw,  93  Ala.  245,  9  South.  719;  Hagenbeck  v.  Arena  Co.,  59 
Fed.  14.  Where  two  parties  agree  that  one  shall  furnish  a  farm  and  a  certain 
amount  of  teams  and  labor,  and  the  other  to  give  labor  and  manage  the  farm,  and 
the  crop  to  be  divided  between  them,  such  an  agreement  does  not  constitute  a 
partnership.  Blue  v.  Leathers,  15  111.  31.  See,  also.  Hurley  v.  Walton,  63  111. 
2G0;  Sargent  v.  Downey,  45  Wis.  49S;  Gilman  v.  Cunningham,  42  Me.  98;  Car- 
ter V.  Bailey,  64  Me.  458;  Austin  v.  Thomson,  45  N.  H.  113;  Donnell  t.  Harshe, 
67  Mo.  170;    Smith  v.  Summerlin,  48  Ga.  425. 


§    IS)  SHARING   GROSS    RETURNS,  65 

sum  may  come  out  of  profits,  if  they  are  suflBcient,  it  will,  neverthe- 
less, come  out  of  somebody,  though  there  be  no  profits.  The  fixed 
amount,  which  is  independent  of  the  success  or  failure  of  the  busi- 
ness, betrays  a  stranger's  interest,  and  not  a  principal's.  A  propri- 
etor's share  springs  out  of  the  business,  and  varies  according  to  its 
vicissitudes.  A  principal  who  made  no  contribution  himself  could 
never  take  his  co-partner's,  and  make  gain  out  of  his  co-partner's 
loss  and  the  failure  of  the  business."  *■" 

Illustrations. 

A  sailor  shipping  for  a  whaling  voyage  under  an  agreement  to  re- 
ceive a  share  of  the  oil  for  his  services  takes  it  as  a  servant,  and 
not  as  a  partner.^^^  Connecting  carriers  are  not  partners,  though 
a  through  rate  is  charged,  where  each  bears  the  expense  of  its  own 
portion  of  the  line,  and  the  gross  receipts  are  shared  in  an  agreed 
proportion.^ ^®     But,  if  there  is  any  expense  to  be  paid  out  of  the 

176  J.  Pars,  Partn.  §  62.     This  is  the  only  intelligible  explanation  of  the  rule 
to  be  found  in  the  books. 

177  Wilkinson  t.  Frasier,  4  Esp.  182.  And  see  Mair  v.  Glennie,  4  Maule  &  S. 
240;    Moore  v.  Curry,  106  Mass.  409;    Coffin  v.  Jenkins,  3  Story,  108,  Fed.  Gas. 

17  8  In  Peterson  v.  Railway  Co.,  80  Iowa,  92,  45  N.  W.  573,  Rothrock,  C.  J., 
quotes  with  approval  the  rule  laid  down  in  Hutch.  Carr.  (2d  Ed.)  §  1G9,  which 
is:  "That  where  carriers  over  different  routes  have  associated  themselves  under  a 
contract  for  a  division  of  the  profits  of  the  carriage  in  certain  proportions,  or  of 
the  receipts  from  it  after  deducting  any  of  the  expenses  of  the  business,  they  be- 
come jointly  liable  as  partners  to  third  persons;  but  that,  where  the  agreement  is 
that  each  shall  bear  the  expenses  of  his  own  route  and  of  the  transportation  upon 
it,  and  that  the  gross  receipts  shall  be  divided  in  proportion  to  distance  or  other- 
wise, they  are  partners  neither  inter  se  nor  as  to  third  persons,  and  incur  uo  juiiit 
liability."  See,  also.  Carter  v.  Peck,  4  Sneed  (Tenn.)  203;  Hart  v.  Railroad  Co., 
8  N,  y.  37;  Cincinnati,  H.  &  D.  R.  Co.  v.  Spratt,  2  Duv.  (Ky.)  4;  Block  v.  Rail- 
road Co.,  139  Mass.  308,  1  N.  E.  348;  Hill  Manuf'g  Co.  v.  Boston  &  L.  R.  Corp., 
104  Mass.  122;  Wyman  v.  Railroad  Co.,  4  Mo.  App.  35.  But  see  Smith  v.  Rail- 
road Co.,  58  Mo.  App.  80.  Where  the  owners  of  stage  lines  each  provided  their 
own  carriages  and  horses,  employed  their  own  drivers,  and  paid  the  expenses  of 
their  separate  sections  of  the  route,  except  the  tolls  at  turnpike  gates,  and  the 
moneys  received  as  the  fare  of  passengers,  after  deducting  such  tolls,  were  divided 
among  the  occupants  of  the  several  sections,  in  proportion  to  the  number  of  miles 
of  the  route  run  by  each,  they  were  held  liable  as  partners.  Bostwick  v.  Cham- 
pion, 11  Wend.  571,  affirmed  18  Wend.  175.  But  the  fact  that  the  connecting 
carriers  transact  their  true  business  by  means  of  a  joint  committee  or  a  common 
agent  will  not  make  them  liable  as  such.  Straiten  v.  Railroad  Co.,  2  E.  D. 
GHO.PAIIT.— 5 


66  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

receipts  before  division,  they  are  partners.^^"  Where  the  proprietor 
of  a  theater  lets  it  to  a  manager,  who  finds  the  acting  company,  on 
the  terms  of  the  proprietor  providing  for  the  general  service  and 
expenses  of  the  theater,  and  the  gross  receipts  being  equally  divided, 
the  proprietor's  share  of  receipts  is  merely  a  substitute  for  rent,  and 
his  taking  it  does  not  make  him  in  any  sense  a  partner  with  the 
manager.^*"  A  landowner  and  one  who  cultivates  the  land  for  a 
share  of  the  crop  are  not  partners.^ ®^  A  broker  paid  by  a  commis- 
sion on  goods  sold  is  an  agent,  not  a  partner. ^®^  Brokers  who  have 
agreed  to  divide  commissions  are  not  partners.^ '^     "The  fact  that 

Smith  (N.  Y.)  184;  Ellsworth  v.  Tartt,  26  Ala.  733;  VVatkins  v.  Railroad  Co., 
8  Mo.  App.  569.  An  agreement  to  share  pro  rata  losses  that  cannot  be  located 
does  not  make  the  connecting  carriers  partners.  Aigen  v.  Railroad  Co.,  132 
Mass.  423;  Irvin  v.  Railway  Co.,  D2  111.  103.  An  arrangement  between  a  dis- 
patch company  of  St.  Louis,  Mo.,  and  sundry  railroad  companies  whose  lines  ter- 
minated at  New  York,  whereby  the  latter  separately  agreed  to  carry  all  goods 
for  the  transportation  of  which  the  former  should  contract,  does  not  involve  joint 
liability  upon  the  part  of  the  railroad  companies,  nor  make  them  partners  either 
inter  sese  or  as  to  third  persons.      Insurance  Co.  v.  Railroad  Co.,  104  U.  S.  146. 

iTO  Ellsworth  v.  Tartt,  26  Ala.  733;  Montgomery  &  W.  P.  R.  Co.  v.  Moore,  51 
Ala.  394;  Insurance  Co.  v.  Railroad  Co.,  104  U.  S.  146;  Briggs  v.  Vanderbilt,  19 
Barb.  222;  Gass  v.  Railroad  Co.,  99  Mass.  220;  Converse  v.  Transportation  Co., 
33  Conn.  166.  Where  several  persons  were  engaged  in  running  a  line  of  stages, 
and,  by  the  agreement  between  them,  one  was  to  run  at  his  own  e.xpense  a  certain 
liortion  of  the  route,  and  the  others,  in  like  manner,  the  residue,  each  being  au- 
thorized to  receive  fare  from  passengers  over  the  whole  or  any  part  of  the  route, 
and  the  fare  so  received  to  be  divided  between  them  in  proportion  to  the  distance 
which  they  respectively  transported  such  passengers,  held,  that  this  did  not  con- 
stitute a  partnership  between  the  parties.  Pattison  v.  Blanchard,  5  N.  Y.  186. 
See  Hale,  Bailm.  &  Carr.  pp.  473-475. 

X80  Lyon  v.  Knowles,  3  Best  tV:  S.  556. 

181  Blue  V.  Leathers,  15  111.  31;  M'Laurin  v.  M'Coll,  3  Strob.  (S,  C.)  21;  Front 
V.  Hardin,  56  Ind.  165;  Mann  v.  Taylor,  5  Heisk,  (Tenn.)  267;  Tayloe  v.  Bush, 
75  Ala.  432;  Gurr  v.  Martin,  73  Ga.  528;  Day  v.  Stevens,  88  N.  C.  83;  Don- 
nell  V.  Harshe,  67  Mo.  170;  Musser  v.  Brink,  68  Mo.  242,  80  Mo.  350;  Brown 
V.  Jaquette,  M  Pa.  St.  113;  Moore  v.  Smith,  19  Ala.  774.  But  see  Allen 
V.  Davis,  13  Ark.  28;  Adams  v.  Carter,  53  Ga.  160;  Holifield  v.  White,  52  Ga. 
567.  Cf.  Plummer  v.  Trost,  81  Mo.  425;  Urquhart  v.  Powell,  54  Ga.  29; 
Brown's  Ex'r  v.  Higginbotham,  5  Leigh  (Va.)  583. 

182  Dillard  v.  Scruggs,  36  Ala.  670.      Bates,  Partn.  §§  60,  43. 

183  Wass  V.  Atwater,  33  Minn.  83,  22  N.  W.  8;  Pomeroy  v.  Sigerson,  22  Mo. 
177.      But  see  Thwing  v.  Clifford,  136  Mass.  482 


§  19)  CONTEMPLATED  PARTNERSHIPS.  67 

the  recipient  of  part  of  the  gross  receipts  is  to  fnmish  part  of  the 
expenses  or  tools  or  material,  as  well  as  labor,  does  not  alter  the 
result.  Thus,  in  cultivating  land,  where  an  overseer  or  cultivator 
is  to  furnish  part  of  the  teams  or  pay  part  of  the  labor,  and  the 
crop  is  to  be  divided,  it  is  not  a  partnership,  but  is  a  leasing  or  an 
employment  or  a  tenancy  in  common  of  the  crop,  according  to  the 
nature  of  the  enterprise."  ^®*  Co-owners  of  a  chattel  who  agree  to 
divide  its  gross  earnings  are  not  partners.^ ^'  French  v.-  Styring  ^^^ 
is  a  leading  case  on  this  point.  There  the  plaintiff  and  defendant 
were  entitled  in  common  to  a  race  horse.  It  was  agreed  that  the 
plaintiff  should  keep,  train,  and  have  the  management  of  the  horse; 
that  35  shillings  a  week  should  be  allowed  for  the  expenses  of  his 
keep;  that  the  plaintiff  should  pay  the  expenses  of  entering  the 
horse,  and  conveying  him  to  the  different  races;. and  that  one-half  of 
the  horse's  keep  and  other  expenses  and  his  winnings  should  be 
equally  divided  between  the  plaintiff  and  the  defendant.  This  agree- 
ment was  held  not  to  create  a  partnership.  It  was  no  more  a  partner- 
ship than  if  two  tenants  in  common  of  a  house  had  agreed  that  one 
of  them  should  have  the  general  management  and  private  funds  for 
necessary  repairs,  so  as  to  render  the  house  fit  for  the  habitation 
of  a  tenant,  and  that  the  net  rent  should  be  divided  among  them 
equally. 

SAME— CONTEMPLATED  PARTNERSHIPS. 

19.  Partnership  is  not  the  result  of  an  agreement  to 
share  profits  so  long  as  anything  remains  to  be 
done  before  the  right  to  share  them  accrues. 

18*  Bates,  Partn.  g  61.  A  lease  of  a  farm,  by  which  the  landlord  furnished  the 
stock  ou  the  farm  and  one-half  the  seed  grain,  the  profits  to  be  equally  divided, 
does  not  constitute  a  partnership,  but  the  parties  are  co-tenants  in  the  products. 
Williams  v.  Rogers  (Mich.)  68  N.  W.  240.  An  agreement  between  two  parties 
to  farm  on  shares,  one  of  whom  is  to  expend  a  certain  sum  in  the  farming  opera- 
tions, does  not  constitute  a  partnership,  though  one  of  the  parties  spoke  of  it  as 
such.  Rose  v.  Buscher,  SO  IMd.  225,  30  Atl.  637.  See,  also.  Cherry  v.  Strong, 
96  Ga.  183,  22  S.  E.  707;    Freeman  v.  Gordon,  59  111.  App.  189. 

18  B  Quackenbush  v.  Sawyer,  54  Cal.  489.  "A  mere  joint  ownership  does  not 
make  a  partnership,  noi  does  dividing  an  income."      Bates,  Partn.  §  03. 

ise2  C.  B.  (N.  S.)  357. 


68  DEFINITION    AND    ESTABLISHMENT  OP    RELATION.  (Ch.    1 

It  la  important  to  distinguish  between  actual  and  contemplated 
partnerships.  Persons  who  are  only  contemplating  a  future  part- 
nership, or  who  have  only  entered  into  an  agreement  that  they  will 
at  some  future  time  become  partners,  cannot  be  considered  as  part- 
ners before  the  arrival  of  the  time  agreed  upon.^'^  It  is  not  always 
easy  to  determine  whether  an  agreement  amounts  to  a  contract  of 
partnership,  or  only  to  an  agreement  for  a  future  partnership.  The 
test,  however,  is  to  ascertain  from  the  terms  of  the  agreement  itself 
whether  any  time  has  to  elapse  or  any  act  remains  to  be  done  before 
the  right  to  share  profits  accrues;  for,  if  there  is,  the  parties  will 
not  be  partners  until  such  time  has  elapsed  or  act  has  been  per- 
formed.*" 

i»T  Dickinson  v.  Valpy,  10  Barn.  &  C.  I'M.  Until  an  agreement  of  partnership 
has  been  executed  at  least  so  fur  as  to  entitle  one  to  a  purtioii>iitiou  in  profits,  he 
cannot  inaiiitniu  n  »<uit  for  the  iippointment  of  .i  receiver  and  a  dissolution.  Ho- 
bart  V.  Ballard,  31  Iowa,  51il.  On  the  subject  of  incomplete  partnership,  see 
Lycoming  Ins.  Co.  v.  Barringer,  73  111.  liSO;  Wilson  v.  Campbell,  10  III.  383: 
Baldwin  v.  Burrows,  47  N.  Y.  I'JD;  Keboul  t.  Chalker,  27  Conn.  114;  Sno.lKrass 
V.  Reynolds,  79  Ala.  452.  A  mere  agreement  to  constitute  a  partnership  in  futuro 
does  not  make  the  contracting  parties  liable  as  partners.  In  Atkins  v.  Hunt,  14 
N.  H.  205,  the  defendant  signed  articles  of  association  in  trade  under  the  name  of 
the  Farmers'  &  Mechanics'  Store,  by  which  it  was  provided  that  any  stockholder 
might  withdraw  upon  giving  six  months'  notice,  and  that  the  business  of  the  com- 
pany should  be  done  pursuant  to  a  major  vote  of  those  present.  A  by-law  pro- 
vided that  each  subscriber  should  become  a  partner.  Defendants  subscribed  a 
certain  sum.  It  was  held  that  this  was  not  siniply  an  agreement  ♦hat  a  partner- 
ship should  be  formed  at  some  future  day,  but  an  actual  existing  partnership  be- 
tween the  subscribers,  both  inter  se  and  as  to  third  persons.  See,  also,  Goddard 
V.  Pratt,  16  Pick.  (Mass.)  412. 

i8«  Lindl.  Partn.  p.  '20.  See  I^avis  ▼.  Evans,  39  Vt.  1S2;  London  Assur.  Co. 
V.  Drenneu,  116  U.  S.  461,  6  Sup.  Ct.  442;  Sailors  v.  Printing  Co.,  20  111.  App. 
509.  Where  the  contract  makes  certain  acts  conditions  precedt'ut,  no  partnership 
exists  until  such  acts  are  performed.  See  James  v.  Stratton,  32  111.  202;  Steven- 
son V.  Mathers.  67  III.  125;  Hobart  v.  Ballard,  31  Iowa,  521.  All  conditions  pre- 
cedent are  waived  by  actually  launching  the  partnership.  Ontario  Salt  Co.  v. 
Merchants'  Salt  Co.,  18  Grant,  Ch.  551;  McStea  v.  Matthews,  50  N.  Y.  IGG;  Hub- 
bard v.  Matthews.  54  N.  Y.  43;  Hartman  v.  Woehr,  18  X.  .7.  Eq.  383.  A  partner 
may,  at  the  expiration  of  the  term  for  which  the  partnership  was  formed,  main- 
tain an  action  against  the  other  partners,  although  he  paid  into  the  firm  only  a 
part  of  the  money  which  by  the  contract  forming  the  partnership  he  agreed  to 
pay  in.      I'alnier  v.  Tyler,  15  Minn.  106  (Gil.  81).     Option  to  bcfome  a  partner. 


§19)  CONTEMPLATED  PARTNERSHIPS.  69 

"A  marked  distinction  exists  in  law  between  an  agreement  to  enter 
into  the  co-partnership  relation  at  a  future  day  and  a  co-partnership 
actually  consummated.  It  is  an  elementary  principle  that  a  partner- 
ship in  fact  cannot  be  predicated  upon  an  agreement  to  enter  into  a 
co-partnership  at  a  future  day,  unless  it  be  shown  that  such  agreement 
was  actually  consummated.  In  the  language  of  the  text-books,  the 
partnership  must  be  'launched.'  To  constitute  the  relation,  therefore, 
the  agreement  between  the  parties  must  be  an  executed  agreement. 
So  long  as  it  remains  executory,  the  partnership  is  inchoate,  not  hav- 
ing been  called  into  being  by  the  concerted  action  necessary  under  the 
partnership  agreement.  It  is,  undoubtedly,  true  that  a  partnership 
in  praBsenti  may  be  constituted  by  an  agreement  if  it  appears  that  such 
was  the  intention  of  the  parties.  But  where  it  expressly  appears  that 
the  arrangement  is  contingent,  or  is  to  take  effect  at  a  future  day,  it  is 
well  settled  that  the  relation  of  partners  does  not  exist,  and  that,  if 
one  or  more  of  them  refuse  to  perform  the  agreement,  there  is  no  rem- 
edy between  the  parties  except  a  suit  in  equity  for  specific  perform- 
ance, or  an  action  at  law  for  the  recovery  of  damages,  should  ajoy  be 
sustained."  "' 


see  Lindl.  Partn.  p.  20;  Ex  parte  Davis,  4  De  Gex,  J.  &  S.  523;  Gabriel  v.  Evill, 
0  Moes.  &  W.  207:  Ex  parte  Turquatid,  2  Montagu,  D.  &  D.  330;  In  re  Hall, 
15  Ir.  Ch.  287:  Irwin  v.  Bidwell.  72  Pa.  St.  244;  Williams  v.  Sontter,  7  Iowa, 
435.  Option  not  to  be  a  partner,  see  Bidwell  v.  Mndison,  10  Minn.  13  (Gil.  1). 
When  a  contract  between  parties  contemplates  action  to  be  taken  at  once  and 
continuously  for  the  joint  benefit,  one  party  to  furnish  the  money  in  advance  and 
the  other  to  give  his  time  and  attention  to  putting  up  machinery  to  carry  on  the 
proposed  enterprise,  a  present  partnership  is  created,  and  not  merely  an  agreement 
to  form  a  future  partnership  entered  into.  The  purpose  must  be  derived  from 
the  nature  of  the  agreement,  and  not  from  the  meaning  of  the  words  as  present 
or  future  standing  alone.  Kerrick  v.  Stevens,  55  Mich.  167,  20  N.  W.  8SS. 
189  Me.ifrher  v.  Reed,  14  Colo.  335,  24  Pac.  6S1,  685.  Where  there  is  an  agree- 
ment to  be  partners  after  a  fixed  time,  the  mere  arrival  of  such  time  does  not 
necessarily  make  the  parties  partners.  Non  constat  one  of  them  may  repudiate 
the  agreement,  and  elect  to  respond  in  damages  for  breach  of  contract.  The  part- 
nership must  be  launched.  See  Doyle  v.  Bailey,  75  111.  418;  Wilson  v.  Campbell, 
10  111.  383;  Powell  v.  Maguire,  43  Cal.  11;  Vance  v.  Blair,  18  Ohio,  532;  Gray 
V  Gibson,  6  Mich.  300;  Brink  v.  Insurance  Co..  5  Rob.  (N.  Y.)  104.  See,  also. 
Queen  City  Furniture  &  Carpet  Co.  v.  Crawford,  127  Mo.  n.'lti.  30  S.  W.  163: 
Latta  V.  Kilbourn,  150  U.  S.  524.  14  Sup.  Ct.  201. 


70  DEFINITION    AND    ESTABLISHMKNT    OF    RELATION.  (Ch.    i 

Partnership  Articles  to  he  Dramn  Up. 

Persons  who  agree  to  become  partners  may  be  partners,  although 
they  contemplate  signing  a  formal  partnership  deed,  and  never  sign 
it."°  But  if  they  are  not  to  be  partners  until  they  sign  formal  arti- 
cles of  partnership,  and  if  they  do  not  so  act  as  to  waive  the  perform- 
ance of  such  condition,  they  will  not  be  partners  until  it  has  been  per 
formed.  Beginning  business  before  pt'rfoniiance  of  conditions  is  evi- 
dence of  a  waiver."*  WTirre,  however,  two  persons  agreed  to  become 
partners  from  a  subsequent  day,  upon  certain  terms  to  be  embodied  in 
a  deed  to  be  executed  on  that  day,  it  was  held  that  the  partnership  be 
gan  on  the  day  mentioned,  although  the  deed  was  not  executed  until 
afterwards,  and  although  alterations  were  made  in  it  immediately  be 
fore  its  execution.**'  In  this  case,  however,  the  parties  did,  in  fact, 
commence  business  as  partners  on  the  day  named,  and  it  was  wholly 
immaterial  fas  regarded  the  question  before  the  court)  what  the  terms 
of  the  partnership  were. 

SAME— PROMOTERS  OF  CORPORATIONS. 

20.  Promoters  of  corporations  are  not  partners. 

Promoters  of  corporations  are  not  jiartners  b<rause  they  have  not 
agreed  to  do  those  things  which  in  law  constitute  a  partnership.     The 

»•«  Syers  t.  Syers,  1  App.  Cas.  174.  The  commencement,  aa  to  third  persona,  .f 
ft  partnership  at  a  time  prior  to  the  date  of  the  partnership  articles,  may  be  showi; 
by  the  acts,  declarations,  and  denlinps  of  such  persons,  as  partners,  prior  to  that 
(late,  which  have  induced  such  third  persons  to  deal  with  tht-ra  as  partners.  Cain 
Lumber  Co.  v.  Standard  Ury-Kiln  Co.  (Ala.)  18  Sonth.  H.SJ. 

191  See  Cook  v.  Carpenter,  34  Vt.  121;  Davis  v.  Evan.s,  39  Vt.  182;  Atkins  v. 
Hunt,  14  N.  H.  205;  Hnrtman  v.  Woehr.  18  N.  J.  Eq.  383;  Morrill  ▼.  Spurr,  143 
Mass.  2r>7,  9  N.  E.  580;  National  Rnnk  of  Chemung  v.  InRraham,  58  Barb.  (N. 
Y.)  200;  First  Nat.  Hank  v.  Cody.  '.>3  Ga.  127,  19  S.  E.  831.  Defendant  and 
plaintid  agreed  orally  to  form  a  p.Trtnorshlp  to  carry  on  an  hotel  purchased  by  de- 
fendant. In  contemplation  of  the  fuUillment  of  this  agreement,  they  began  busi- 
ness, made  contracts,  opened  the  books,  and  performed  various  other  acta  Id  tin- 
partnership  name.  When  the  articles  of  ixirtncrship  were  drawn  up,  they  could 
not  agree  upon  the  terms,  and  defendant  finally  dechned  to  enter  into  the  partnei- 
Bhip.  Held,  that  there  was  nothing  to  Indicate  that  the  partnership  was  actually 
formed,  entitling  plaintiff  to  an  accounting.  Martin  v.  Baird,  175  Pa.  St.  540,  34 
Atl.  8t)9. 

i»2  Battley  v.  Lewis,  1  Man.  &  G.  155.  And  see  Wilson  v.  Lewis,  2  Man.  &  G. 
197.      Cf.  Ellis  V.  Ward.  21  Wkly.  Rep.  100. 


§    21)  DEFECTIVE  CORPORATIONS.  71 

immediate  object  of  their  agreement  is  the  formation  of  a  corporation, 
not  the  carrjing  on  of  a  joint  business  for  profit.  The  parties  have 
agreed  to  enter  into  a  certain  relation  at  some  time  in  the  future  after 
certain  conditions  have  been  complied  with.  This  relation  is  not  one 
of  partnership,  but  of  stockholders  in  a  corporation;  but,  even  if  a 
future  partnership  was  intended,  it  is  clear,  as  has  been  seen,  that  no 
partnership  exists  in  the  meantime.^"  Pereons  associated  for  the 
purpose  of  forming  a  joint-stock  company  are  not  partners.  They, 
clearly,  are  not  partners  in  the  company  to  be  formed,  and  they  cannot 
be  considered  as  members  of  a  partnership  formed  to  start  the  com- 
pany.^** 

In  Lucas  v.  Beach  *•"  it  was  asked  in  argument:  "^liat  is  there  to 
prevent  a  number  of  indinduals  from  entering  into  a  partnership  with 
a  limited  object,  in  the  first  instance,  of  procuring  an  act  of  parliament, 
and  with  an  ulterior  object  in  view  when  the  act  is  passed?  The  an 
swer  is  that  to  call  persons  so  associated  partners  is  to  ignore  the  dif- 
ference between  a  contract  of  partnership  and  an  agreement  to  enter 
into  such  a  contract;  to  confound  an  agreement  with  its  result;  and 
to  hold  |>erson8  to  ho  partners,  although  they  have  not  yet  acquired 
any  right  to  share  profits."  *'• 

SAME— DEFECTIVE  CORPORATIONS. 

21.  Persons  doing  business  as  a  corporation,  in  good  faith 
believing  themselves  to  be  stockholders  in  a  valid 
corporation,  are  not  liable  as  partners,  although 
the  incorporation  is  in  fact  invalid. 

"If  an  association  assumes  to  enter  into  a  contract  in  a  corporate 
capacity,  and  the  party  dealing  \Nith  the  association  contracts  ^vith  it 
as  If  it  were  a  corporation,  the  individual  members  of  such  associa- 

188  Reynell  v.  Lewis,  15  Mees.  &  W.  517;  Wyld  v.  Hopkins,  Id.;  Ex  parte 
Capper,  1  Sim.  (N.  S.)  178;  Tanner's  Case,  5  De  Gex  &  S.  182;  Bright  v.  Hutton, 
3  H.  L.  Cas.  3G8;  Hamilton  v.  Smith,  5  Jur.  (N.  S.)  32;  West  Point  Foundry 
Ass'n  ▼.  Brown,  3  Edw.  Ch.  (.N.  Y.)  284;  Bates,  Partn.  §  89.  Lindh-y  says  (page 
24)  that  Holmes  v.  Higgin.s,  1  I'arn.  &  C.  74,  and  Lucas  v.  Bea<;li,  1  Man.  &  G. 
417,  cannot  be  relied  on  as  authorities  contra. 

»»4  Lindl.  Partn.  p.  24.  io&  1  Man.  &  G.  417.  i9«  Lindl.  Partn.  p.  24. 


72  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

tion  cannot  be  charged  as  parties  to  the  contract,  either  severally  or 
jointly,  or  as  partners.  This  is  equally  true  whether  the  association 
was  in  fact  a  corporation  or  not,  and  whether  the  contract  with  the 
association  in  its  coriK)rate  capacity  was  authorized  by  the  legislature 
or  prohibited  by  law  and  illegal.  The  fact  that  the  parties  have  failed 
to  make  a  binding  contract,  as  contemplated,  because  they  erroneously 
supposed  that  the  association  was  a  corporation,  or  because  the  agree- 
ment actually  entered  into  was  prohibited  by  law,  and  invalid,  would 
certainly  not  be  a  reason  for  treating  them  as  if  they  had  entered  into 
a  dilTerent  agreement  which  neither  of  the  parties  contemplattnl.  If 
an  association  undertakes  to  enter  into  a  contract  as  a  corporation,  it 
is  clear  that  the  members  of  the  association  do  not  agree  to  be  par- 
ties to  the  contract  severally  or  jointly.  They  do  not  agree  to  be 
bound  as  partners  eitlier  to  each  other  or  to  the  party  contracting  with 
the  assoei;ition.  It  is  equally  clear  that  the  party  contracting  with 
the  association  does  not  intend  to  contract  with  its  members  indind- 
ually.  To  treat  the  individual  members  of  the  association  as  parties 
to  the  contract,  under  these  circumstances,  would  therefore  involve, 
not  only  the  nullification  of  the  contract  which  was  actually  contem- 
plated by  the  parties,  but  the  creation  of  a  different  contract,  which 
neither  of  the  parties  intended  to  make."  "*^      This  view  of  the  law 

i»T  Mor.  PriT.  Corp.  |  780.  Bates  says,  "The  authority  apainst  this  is,  how- 
ever, very  formidable,  and  is  based  on  general  public  policy,  rather  than  on 
nny  principle  of  partnership  law."  Bates,  I'artn.  S  ■*•  In  support  of  the 
text,  see  Merchants'  &  Manufacturers'  Bank  v.  Stone,  ^8  Mich.  770;  State  v. 
IIow,  1  Mich.  51U  (cf.  Whipple  v.  Parker,  29  Mich.  3W));  Central  City  Suv. 
Bank  t.  Walker,  60  N.  Y.  4i:4;  Fuller  v.  Rowe,  57  N.  Y.  23  (but  see  Na- 
tional Union  Bank  v.  Landon,  45  N.  Y.  410);  Fay  v.  Noble,  7  Cush.  (Mass.) 
188;  Trowbridge  t.  Scudder,  11  Cush.  (Mass.)  83  (see  Ilawes  v.  Petroleum 
Co.,  101  Mass.  3«5,  111  Mass.  200;  Burnap  v.  Engine  Co.,  127  Mass.  586)  ;  First 
Nat.  Bank  v.  Alniy,  117  Mass.  476;  Harrod  t,  Ilamer,  32  Wis.  162;  Second  Nat. 
Bank  v.  Hall,  35  Ohio  St.  158;  Gartside  Coal  Co.  v.  Maxwell,  22  Fed.  11)7;  Plant- 
ers' &  Miners'  Bank  v.  Padgett,  6'J  Ga.  159;  Stafford  Nat.  Bank  v.  Palmer,  47 
Conn,  443.  Those  who  a<  t  as  iijziiits  for  an  inchoate  corporation  act  without  a  prin- 
cipal behind  them,  because  there  is  no  body  corixjrate  capable  of  appointing  agents, 
and  so  become  principals  in  the  transaction.  Their  mistake,  though  shared  by  the 
other  subscribers  to  the  stock,  does  not  make  such  subscribers  partners  In  the 
business  done.  Ward  v.  Brigham,  127  Mass.  24.  See,  also,  Trowbridge  t.  Scud- 
der, 11  Cush.  (Mass.)  83;  First  Nat.  Bank  v.  Almy,  117  Mass.  476;  Finnegan  v. 
Noereuberg,  52  Minn.  239,  53  N.  W.  1150;    Clark.  Corp.  §  45. 


I    21)  DEFECTIVE  CORPORATIONS.  73 

Is  supported  by  the  weight  of  authority,  though  there  is  ample  and 
weighty  authority  to  the  effect  that  under  such  circumstances  the  stock- 
holders are  liable  as  partners.^"*  Where,  however,  the  parties  act 
with  full  knowledge  that  they  do  not  constitute  a  corporation,  they  will 
be  partners,  because  it  is  clear  that  they  intended  to  conduct  a  busi- 
ness, and  jointly  own  the  profits."* 

In  all  cases  liability  will  attach  to  the  officers  and  stockholders  who 
actually  engage  in  the  transaction,  and  to  those  who  authorize  or  sanc- 
tion it.  This  is  upon  the  familiar  principle  of  law  that  a  person  who 
acts  as  agent  without  authority  or  without  a  principal  is  himself  re- 
garded as  a  principal,  and  has  all  the  rights,  and  is  subject  to  all  the 
liabilities,  of  a  principal. '"^ 

Where  an  existing  partnership  attempts  to  become  incorporated, 
but  fails  to  effect  a  valid  organization,  it  remains  a  partnership. 2"' 
The  same  rule  applies  where  the  finn,  having  become  incorporated, 
continues  to  transact  business  in  the  partnership  name;  *"'  as  is  also 
the  case  where  the  members  of  a  corporation  knowingly  continue 
their  business  after  the  expiration  of  their  charter.  =^0' 

i»8  To  the  effect  that,  if  the  corporate  orgauization  is  defective,  the  members 
are  liable  as  partneis,  see  Kipelow  v.  Gregory,  73  111.  197.  See.  also,  Coleman  v. 
Coleman,  78  Ind.  344;  lIolLrook  v.  Insurance  Co.,  25  Minn.  229;  Hurt  v.  Salis- 
bury, 55  Mo.  310;  Lindl.  Partn.  (Wentw.  Ed.)  5;  Jessup  v.  Carnegie,  80  N.  Y.  441; 
National  Union  Bank  of  Watertown  v.  Landon,  45  N.  Y.  410;  Flagg  v.  Stowe,  85 
111.  164;  Field  v.  Cooks,  IG  La.  Ann.  153;  Chaffe  v.  Ludeling,  27  La.  Ann.  607; 
Kaiser  v.  Bank,  56  Iowa,  104,  8  N.  W.  772;    Martin  v.  Fewell,  79  Mo.  401. 

»»»  Ridenour  v.  Mayo,  40  Ohio  St.  9. 

200  Medill  V.  Collier,  16  Ohio  St.  599,  612;  Stafford  Nat.  Bank  v.  Palmer.  47 
Conn.  443;  Second  Nat.  Bank  of  Cincinnati  v.  Hall,  35  Ohio  St.  158.  lu  Gait- 
side  Coal  Co.  t.  Maxwell,  22  Fed.  197,  Brewer,  J.,  said  that  where  persons 
knowingly  and  fraudulently  assume  a  corporate  existence,  or  pretend  to  have  a 
corporate  existence,  they  can  be  held  liable  as  individuals;  but  where  they  are 
acting  in  good  faith,  and  suppose  that  they  are  legally  incorporated,  they  cannot 
be  held  so  liable.  In  Trowbridge  v.  Scudder,  11  Cush.  (Mass.)  83,  the  court 
said  that,  if  members  of  a  corporation  give  notes,  which  the  corporation  is  not 
bound  to  pay,  and  which  it  refuses  to  pay,  the  remedy  against  them  is  not  by  an 
action  on  the  notes,  but  by  an  action  of  tort,  as  is  the  remedy  against  one  who 
signs  a  note  as  agent  for  another  without  authority. 

201  Bates,  Partn.  §  8. 

2-^2  Witmer  v.  Schlatter,  2  Eawie  (Pa.)  359;    Garnett  ▼.  Richardson,  35  Ark. 
144:    Farmers'  Bank  v.  Smith,  26  W.  Va.  541. 
2C3  National  Union  Bank  of  Watertown  t.  Landon,  45  N.  Y.  410. 


74  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  C^b.    1 


DELECTUS  PERSONARUM. 

22.  No  person  can  be  introduced  as  a  partner  without 
the  consent  of  all  those  who  for  the  time  being  ore 
members  of  the  flrm.'^ 

By  the  conveyance  of  a  partner  to  a  strangrer  of  his  share  In  the 
business   without  the  const  nt  of  the  other  partners,   the  relation 
would  come  to  an  end  ipso  facto,  if  the  partnership  v\-a8  one  to  be  de- 
termined at  the  will  of  the  partners."'     If  the  partnership  was  not 
thus  determinable,  such  a  conveyance  would  not  have  so  summary  an 
effect,  because,  if  such  was  the  case,  it  would  lie  in  the  power  of  a 
partner  always  to  terniinalc  the  relation  voluntarily,  notwithstand- 
ing anything  to  the  contrai-y  he  may  have  agreed  to  in  the  articles. 
In  the  latter  case,  however,  any  of  the  partners  aggrieved  by  the  con 
veyance  would  be  in  a  position  to  have  the  pju'tnership  dissolved 
upon  application  to  a  court  of  equity."*     It  is  not  only  that  the  pro- 
posal to  bring  another  person  in  tends,  as  the  effect  of  some  merely 
arbitrary-  nile  of  law.  to  terminate  the  relation,  but  that  the  part 
nership   loses   its   itlmtity   by   any   change  at   all    in    the   member- 
ship, according  to   the   strictly   legal   aspect   of  a  partnership,   in 
which  aspect  the  individual  partners  are  prominent  always,  to  the 
exclusion  of  the  entity.      Hut  such  a  transfer  would,  even  according 
to  the  mercantile  aspect,  have  a  similar  tendency,  because,  on  ac- 

20*  Pol,  Partn.  art.  38;    Story.  Pnrtn.  §§  6,  195. 

208  Bates.  Pnrtn.  §S  1G2.  570;  Wilson  v.  Waugh.  101  Pa.  St.  'J.^.^;  Carter  t. 
Roland,  53  Tex.  540;  Fcurtli  Nat,  Bank  of  New  York  v.  New  Orleans  &  C. 
R.  Co.,  11  Wnll.  n'_'4.     See  post,  p.  .T.)7.  "Dissolution." 

200  "As  regards  dissolution.  It  is  remarkable  that  there  should  be  so  little  au- 
thority to  be  found.  It  is  generally  stated  that,  if  a  member  of  an  ordinary 
partnership  transfers  his  share,  he  thereby  dissolves  the  partnership;  but  this 
proposition  requires  qualification.  The  true  doctrine,  it  is  submitted,  is  that,  if 
the  partnership  is  at  will,  the  assignment  dissolves  it  (see  Honth  v.  Sansom.  4 
Barn.  &  Adol,  172);  and.  if  the  partnership  is  not  at  will,  the  other  members  are 
entitled  to  treat  the  assignment  as  a  cause  of  dissolutibn.  It  can  hardly  be  that 
a  partner,  who  has  himself  no  right  to  dissolve  or  to  introduce  a  new  partner, 
can,  by  assigning  his  share,  confer  on  the  assignee  a  right  to  have  the  accounts 
of  the  firm  taken,  and  the  affairs  thereof  wound  up.  in  order  that  he  may  obtain 
111.'  I'onefit  of  his  assijL'nment."      Lindl.  Partn,  p.  3C.4. 


^    23)  SPIXIFIC    PERFORMANCE.  75 

count  of  a  strict  confiaence  in  each  other  being  essential  with  co- 
partners, mutual  assent  in  the  mere  matter  of  association  is  neces- 
sarily a  vital  and  governing  principle  in  not  only  the  establishing, 
but  also  the  maintaining,  of  the  partnership  relation.  This  principle 
of  delectus  personarum  does  not  prohibit  what  is  known  as  a  "sub- 
partnership."  "T  There  is  nothing  to  prevent  a  partner  making  an 
agreement  with  a  stranger,  whereby  the  latter  shall  participate  with 
him  in  his  share  of  the  profits  of  the  lirni;  for  this  subpartncr,  as 
the  stranger  then  becomes,  has  no  relations  whatsoever  with  the 
firm,  but  only  with  the  i)erson  with  whom  he  has  contracted.^"'  In 
what  are  known  as  ''mining  partnerships"  the  principle  of  delectus 
personarum  does  not  enter,  and  the  fact  that  it  does  not  is  sutlicient 
to  deny  to  such  an  enterprise  the  character  of  a  partnership,  in 
strictness  of  words."*  So.  also,  in  joint-stock  companies  there  is  no 
delectus  personarum."" 

Of  course,  the  parties  may  agree  in  advance,  in  the  partnership 
articles,  to  the  admission  of  new  partners  by  the  assignment  of  any 
partner's  share,  or  to  the  admission  of  the  personal  representatives 
of  any  paitner  upon  his  death.^^^ 

SPECIFIC    PERFORMANCE. 

23.  Specific   performance  of  an  agreement  for  a  partner- 
ship will  not  be  decreed,  except 

EXCEPTION— (a)  When  the  execution  of  an  instrument 
or  of  articles  of  partnership  are  necessary  to  con- 
fer rights  upon  the  other  party,  or  to  determine 
his  status,  it  will  be  decreed  whether  the  partner- 

»0T  Burnett  v.  Snyder,  7G  N.  Y.  344,  349,  81  N.  Y.  550. 

20 s  .<^.^.  ji,,j;t,  p,  7<)^  ■■JSuhpartucrsliips." 

so»See  Kahn  t.  Smelting  Co.,  102  U.  S.  041;  Duiyea  t.  Burt,  28  Cal.  569. 
In  this  peculiar  kind  of  partnership  there  is  no  delectus  personarum,  but  any 
partner  may  assign  his  share  without  dissolving  the  firm.  Nor  is  death  a  disso- 
lution, and  the  assignee  has  liis  rights  and  remedies  against  the  otln-r  associates." 
Bates,  Partn.  §  1(53.    See  post,  p.  92,  c.  2. 

210  In  joint-stock  companies  it  is  agreed  in  the  start  that  the  shares  shall  be 
transferable  without  dissolution,  and  this  is  the  distinguishing  feature  of  such 
associations.     Sec  post,  p.  498. 

211  Sie  post,  p.  397  et  seq. 


76  DEFINITION    AND   ESTABLISHMENT    OF    RELATION.  (Ch.    1 

ship  was  at  will  or  for  a  fixed  term,  but  the  par- 
ties will  not  be  compelled  to  act  under  the  articles 
w^hen  signed. 
(b)  Persons  may  be  decreed  to  be  partners,  for  the  pur- 
poses of  an  accounting,  after  the  joint  adventure 
has  come  to  an  end. 

Oeneral  Rule  against  Specific  Performance  of  AgreemenU  for  Part- 
nership. 

If  two  persona  have  agreed  to  enter  into  partnership,  and  one  of 
them  refuses  to  abide  by  the  agreement,  the  remedy  for  the  other  is 
an  action  for  damages,  and  not,  excepting  in  the  cases  to  be  presently 
noticed,  for  specific  performance.  To  compel  an  unwilling  person  to 
become  a  partner  with  another  would  not  be  conducive  to  the  welfare 
of  the  latter,  any  more  than  to  compel  a  man  to  mairy  a  woman  he 
did  not  like  would  be  for  the  benefit  of  the  lady.  Moreover,  to  de- 
cree specific  performance  of  an  agreement  for  a  partnership  at  will 
would  be  nugatory,  inasmuch  as  it  might  be  dissolved  the  moment 
after  the  decree  was  made;  and  to  decree  specific  performance  of  an 
agreement  for  a  partnership  for  a  term  of  years  would  involve  the 
court  in  the  superintendence  of  the  partnership  throughout  the 
whole  continuance  of  the  term.  As  a  rule,  therefore,  courts  will 
not  decree  specific  performance  of  an  agreement  for  a  partnership."' 
Nor  will  specific  performance  be  decreed  of  an  agreement  to  become 
a  partner  and  bring  in  a  certain  amount  of  capital,  or,  in  default,  to 
lend  a  sum  of  money  to  the  plaintiff.'^* 

Ca.^e8  in  Which  a  Decree  will  he  Made, 

However,  if  the  parties  have  agreed  to  execute  some  formal  instru- 
ment, which  would  have  the  effect  of  conferring  rights  which  do  not 

«i«  Scott  V.  Rayment,  L.  R.  7  Eq.  112;  Hercy  ▼.  Birch,  9  Ves.  357;  Sheffield 
Gas  Consumers'  Co.  v.  Harrison,  17  Beav.  294;  Buxton  v.  Lister,  3  Atk.  .383; 
England  v.  Curling,  8  Beav.  129;  Syers  v,  Syers,  1  App.  Cas.  174;  Buck  v. 
Smith,  29  Mich.  1G6;  Morris  v.  Peckham,  51  Conn.  128.  An  agreement  for  a 
partnership  for  a  fixed  term  will  not  be  enforced.  See  Somerby  v.  Buntin,  US 
Mass.  279;  Meason  v.  Kaine,  G3  Pa.  St.  335;  Stocker  v.  Wedderburn,  3  Kay  & 
J.  393. 

213  Sichel  V.  Moscnthal,  30  Beav.  371.  Where  the  contract  is  merely  to  con 
tribute  capital,  aa  action  for  damages  is  an  adequate  remedy. 


§    23)  SPECIFIC    PERFORMANCE.  77 

exist  so  long  as  the  agreement  is  not  carried  out,  in  such  a  case,  and 
for  the  purpose  of  putting  the  parties  into  the  position  agreed  upon, 
the  execution  of  that  formal  instrument  may  be  decreed,  although 
the  partnership  thereby  formed  might  be  immediately  dissolved.- ^^ 
The  principle  upon  which  the  court  proceeds  in  a  case  of  this  descrip- 
tion is  the  same  as  that  which  induces  it  to  decree  execution  of  a 
lease  under  seal,  notwithstanding  the  term  for  which  the  lease  was 
to  continue  has  already  expired.""  In  England  v.  Curling,^!^  the 
plaintiff  and  two  of  the  defendants  agreed  to  become  partners  as  ship 
agents,  for  seven,  ten,  or  fourteen  years,  and  they  signed  with  their 
initials  an  agreement  to  that  effect.  A  deed  was  prepared  to  carry  out 
the  agreement.  The  deed,  however,  was  never  executed,  and  it  differed 
somewhat  from  the  agreement.  The  parties  carried  on  business  as 
partners  under  the  agreement  for  eleven  years,  and  then  they  began 
to  quan-el.  The  defendant  Curling,  who  appears  to  have  been  in 
the  wrong  from  the  beginning,  gave  notice  to  dissolve  in  thi-ee 
months.  He  retired  from  the  partnership,  and  entered  into  partner- 
ship with  other  persons,  and  carried  on  business  with  them  on  the 
premises  and  in  the  name  of  the  old  firm.  The  new  firm  opened  the 
letters  addressed  to  the  old  one,  and  gave  notice  of  its  dissolution 
to  its  correspondents.  The  plaintiff  then  filed  a  bill  for  specific  per- 
formance and  an  injunction,  and  he  obtained  a  decree."^     It  is  to 

81*  Buxton  T.  Lister,  3  Atk,  385;  Stocker  t.  Wedderburn,  3  Kay  &  J.  403. 
And  see  Crawshay  v.  Maule,  1  Swanst.  513,  note.  Conveyances  of  property 
rights  may  be  enforced.  See  Story,  Partn.  §  189;  1  Story,  Eq.  Jur.  6G0;  Somer- 
by  V.  Buntin,  118  Mass.  279;  Birchett  v.  Boiling,  5  Munf.  (Va.)  442;  Sat- 
terthwait  t,  Marshall,  4  Del.  Ch.  337;  Robinson  v.  Mcintosh,  3  E.  D.  Smith  (N. 
Y.)  221;  Tilman  v.  Cannon,  3  Humph.  (Tenn.)  637;  Beckwith  v.  Manton,  12  R. 
I.  442;  Whitworth  v.  Harris,  40  Miss.  483.  But  see  Sims  v.  McEwen's  Adm'r, 
27  Ala.  184.  \ 

21 B  See  Wilkinson\  t.  Torkington,  2  Younge  &  C.  726. 

«i6  8  Beav.  129.  'See  the  observations  of  Lord  Romilly  on  this  case  in  Sichel 
V.  Mosenthal,  30  Beav.  37G. 

217  The  following  was  the  minute  of  the  decree:  "The  court  doth  declare 
that  the  agreement  for  a  co-partnership,  dated,  etc.,  is  a  binding  agreement  be- 
tween the  parties  thereto,  and  ought  to  be  specifically  performed  and  carried  into 
execution,  and  doth  order  and  decree  the  same  accordingly.  Refer  it  to  the 
master  to  inquire  whether  any  and  what  variations  have  been  made  in  the  said 
agreement  by  and  with  the  assent  of  the  several  parties  thereto  since  the  date 
tLt'ieof.     Let  the  master  settle  and  approve  of  a  proper  deed  of  co-partnership 


78  DEFiNinON    AND    ESTABLISHMENT    OF    RELATION.  (Cll.   1 

be  noticed  that  the  relief  granted  was  by  restraint,  and  not  enforce- 
ment, except  merely  as  to  signing  the  deed. 

Specific  Performance  Where  an  Account  Only  is  Wanted. 

The  only  other  class  of  cases  in  which  anything  like  specific  per- 
formance of  an  agreement  for  a  partnership  will  be  decreed  is  where 
a  person  who  has  agreed  with  another  to  share  the  profits  of  some 
joint  adventure  seeks  to  obtain  that  share  after  the  adventure  has 
come  to  an  end.  Although  the  decree  giving  him  the  relief  he  asks 
may  be  prefaced  by  a  declaration  that  the  agreement  relied  upon 
ought  to  be  specifically  performed,  this  has  not  the  effect  of  creating 
a  partnership  to  be  carried  on  by  the  litigants,  but  merely  serves  as 
a  foundation  for  the  decree  for  an  account,  which  is  the  substantial 
part  of  what  is  sought  and  given.  An  instance  of  this  class  of  cases 
is  afforded  by  Dale  v.  Hamilton.'"  There,  in  substance,  three  per- 
sons had  agreed  to  purchase  land,  to  build  on  it  and  improve  it,  and 
then  to  sell  it  for  their  common  benefit.  Land  was  accordingly  ob- 
tained, built  upon,  and  improved,  and  subsequently  the  right  of  one 
of  the  thn^  persons  to  any  share  in  the  adventure  was  denied  by  the 
other  two.  He  thereujion  filed  a  bill  for  a  sale  of  the  land,  for  an  ac- 
count of  the  joint  speculation,  and  for  a  proper  distribution  of  the 
moneys  arising  from  the  sale;  and  the  court  held  him  entitled  to  this 
relief. 

Another  instance  of  the  same  kind  is  afforded  by  Webster  v. 
Bray.-'*  In  that  ca.se  the  plaint ilT  and  the  defendant  had  been 
jointly  retained  as  solicitors  to  a  company.  They  were  not  in  part- 
nership as  solicitors  generally,  but  the  plaintiff  insisted  that  they 
were  partners  as  regarded  the  business  done  for  the  company,  and 
that  the  payments  made  by  the  company  to  each  ought  to  be  shared 
by  both.  The  defendant  insisted  that  there  was  no  partnership, 
and  that  each  was  to  be  paid  for  the  work  done  by  himself,  and  to  re- 
tain for  his  own  benefit  all  payments  in  respect  of  such  work.  The 
{)laintiff,  having  resigned,  filed  a  bill  for  an  account;  and  the  court 
made  a  decree  in  his  favor,  declaring  that  the  plaintiff  and  the  defend- 
between  the  said  parties  in  pursuance  of  the  said  agreement,  having  regard  to 
any  variations  which  he  may  find  to  hove  been  made  in  the  said  agreement  as 
hereinbefore  directed;  and  let  the  parties  execute  it.  Continue  the  injunction 
against  the  defendant  Curling." 

ti8  5  Hare,  300,  and  2  Thil.  Ch.  260.  «i»  7  Hare.   ir.<,». 


§§    24-25)  8DBPA RTNERSHira.  79 

ant  were  jointly  and  equally  interested  in  the  profits  and  loss  of  the 
business  transacted  by  them,  or  either  of  them,  as  solicitors  to  the 
company.'*' 

SUBPARTNERSHIPS. 

24.  A  contract  bet-w^een  a  partner  and  a  third  person  to 
share  the  former's  proportion  of  the  profits  does 
not  make  such  third  person  a  member  of  such 
partnership. 

26.  Such  a  contract  creates  a  subpartnership  provided 
the  other  requisites  of  a  partnership  agreement 
are  present. 

A  subpartnership  is,  as  it  were,  a  partnership  within  a  partnership. 
It  presupposes  the  existence  of  a  partnership  to  which  it  is  itself  sub- 
ordinate.'*^ An  agreement  to  share  profits  only  may  constitute  a 
partnership  between  the  parties  to  the  ap;reement.  If,  therefore,  sev- 
eral persons  are  partners,  and  one  of  them  agrees  to  share  the  profits 
derived  by  him  with  a  stranger,  this  agreement  does  not  make  the 
stranger  a  partner  in  the  original  firm.'*'  The  result  of  such  an 
agreement  is  to  constitute  what  is  calU'd  a  subpartnership, — tbat  is  to 
say,  it  makes  the  parties  to  it  partners  inter  se;  but  it  in  no  way  affects 
the  other  members  of  the  pnncipal  firm.  Lord  Eldon  puts  the  law  on 
this  subject  very  clearly.  *1  take  it,"  he  says,  "to  have  been  long  since 
established  that  a  man  may  become  partner  with  A.  wliere  A.  and  B. 
are  partners,  and  yet  not  be  a  member  of  that  partnership  which  ex- 
isted between  A.  and  R.  In  the  case  of  Sir  Chas.  Ravmond,  a  banker 
in  the  city,  a  Mr.  Fletcher  agreed  with  Sir  Chas.  Ravmond  that  he 
should  be  interested  so  far  as  to  receive  a  share  of  his  profits  of  the 
business,  and  which  share  he  had  a  right  to  draw  out  from  the  firm  of 
Raymond  &  Co.  But  it  was  held  that  he  was  no  partner  in  that  part- 
nership, had  no  demand  against  it,  had  no  account  in  it,  and  that  he 

«»o  See,  also.  Robinson  v.  Anderson,  20  Beav.  98,  7  De  Gei,  M.  &  G.  239. 

«2i  Lindl.   Partn.  p.  48. 

222  Burnett  v.  Snyder,  76  N.  Y.  344,  81  N.  Y.  550;  Meyer  v.  Krohn,  114  111. 
574,  2  N.  E.  495;  Fitch  v.  Harrington,  13  Gray  (Mass.)  468;  Ileynolds  v. 
Wicks,  19  Ind.  113;    Miller  v.  Rapp,  135  Ind.  614.  34  N.  E.  981,  and  .35  N.  E.  693. 


80  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

mnst  be  satisfied  with  a  share  of  the  profits  arising  and  given  to  Sir 
Chas.  Raymond."  "• 

Liability  to  Creditors. 

Since  the  decision  of  Cox  t.  Hickman  a  snbpartner  cannot  be  held 
liable  to  the  cr<  ditors  of  the  principal  fii-m  by  reason  of  his  participa- 
tion in  the  profits  thereof,*** 

PARTNERSHIP  BY  ESTOPPEL— HOLDING  OUT. 

26.  One  who  so  conducts  himself  as  to  reasonably  induce 
third  persons  to  believe  that  he  is  a  partner,  and 
to  act  upon  that  belief,  is  liable  as  a  partner  to 
such  person. 

The  only  mode  in  which  a  person  not  a  partner  becomes  liable  as 
if  he  were  one  is  by  so  conducting?  himself  as  to  lead  other  people  to 
suppose  that  he  is  willinj?  to  be  repanled  by  them  as  if  he  were  a 
partner  in  point  of  fact.*"     The  principle  of  this  is  obvious  and 

«28  Ex  parte  Barrow.  2  Rose,  252,  254.  See,  also,  Brny  t.  Fromont,  6  Madd. 
5;   Nirdlinper  y.  Bernheimer,  133  N.  Y.  45.  SO  N.  E.  5G1. 

"4  Burnett  V.  Snyder.  HI  N.  Y.  550;  Seizor  v.  Boale.  19  W.  Va.  274.  Cf. 
Fitch  V.  HarrinBton,  13  V.rny  (Mass.)  468;  Ricdeburg  t.  Schmitt,  71  Wis.  644, 
38  N.  W.  3o<;.  "WJiere  the  so-called  'subpartner'  owns  the  entire  interest,  in- 
cluding profits  and  property,  he  must  be  considered  as  the  real  partner,  standing 
In  the  place  of  the  ostensible  one,  and  assuming  hia  obligations  and  liabilities." 
Webb  T.  Johnson.  95  Mirh.  325.  54  N.  W.  947. 

228  Where  a  person  holds  himself  out  as  a  partner  to  a  party  giving  credit  to 
the  supposed  firm,  and  by  his  conduct  or  declaration  induces  such  person  to  give 
credit  in  the  honest  belief  that  he  is  a  partner,  he  will  be  held  liable  as  a  part- 
ner. "The  law  will  therefore  hold  him  liable,  upon  principles  of  general  policy, 
and  for  the  prevention  of  frauds  upon  creditors."  Poole  v.  Fisher,  62  111.  181. 
One  who  holds  himself  out  as  a  partner  is  estopped  to  deny  the  partnership  rela- 
tion, as  against  those  who  have  extended  credit  on  such  representation.  Bissell 
V.  Warde,  129  Mo.  439,  31  S.  W.  928.  One  who.  by  his  acts  and  declarations  in 
•lealing  with  a  biiiiU.  holds  himself  out  to  it  as  a  member  of  a  firm,  thus  inducing 
the  bank  to  discount  notes,  and  pass  the  proceeds  to  the  credit  of  the  firm,  will 
be  liable  to  the  bank  on  the  notes  as  a  member  of  the  firm.  Lancaster  County 
Nat.  Bank  v.  Boffeiimyer,  162  Pa.  St.  559,  29  Atl.  855.  See,  also,  Shafer  v. 
Randolph,  99  Pa.  St.  250;  French  v.  Barron,  49  Vt.  471;  Sherrod  v.  Langdon.  21 
Iowa,  518;    Martyu  v.  Gray,  14  C.  B,  (N.  S.)  824;    Sun  Ins.  Co.  v.  Kountz  Line 


§    26)  PARTNERSHIP    BY    ESTOPPEL.  81 

gatisfactory,  and  Is  well  laid  down  by  Chief  Justice  Eyre  in  the  famous 
case  of  Waugh  v.  Carver.^"  His  lordship  there  said:  "Now,  a 
case  may  be  stated  in  which  it  is  the  clear  sense  of  the  parties  to  the 
contract  that  they  shall  not  be  partners;  that  A.  is  to  contribute 
neither  labor  nor  money,  and,  to  go  still  further,  not  to  receive  any 
profits.  But,  if  he  w  ill  lend  his  name  as  a  partner,  he  becomes,  as 
against  all  the  rest  of  th('  world,  a  partner,  not  upon  the  ground  of 
the  real  transaction  between  them,  but  upon  principles  of  general 
policy,  to  prevent  the  frauds  to  which  creditors  would  be  liable  if 
they  were  to  suppose  that  ihey  lent  their  money  upon  the  apparent 
credit  of  three  or  four  persons,  when,  in  fact,  they  lent  it  only  to 
two  of  them,  to  whom,  without  the  others,  they  would  have  lent  noth- 
ing." 

ITie  doctrine  that  a  person  holding  himself  out  as  a  partner,  and 
thereby  inducing  others  to  act  on  the  faith  of  his  representations,  is 
liable  to  them  as  if  he  were  in  fact  a  partner,  is  nothing  more  tnan  an 
illustration  of  the  general  principle  of  estoppel  by  conduct.  It  is 
therefore  wholly  immaterial  whether  the  person  holding  himself  out 
as  a  partner  does  or  does  not  share  the  profits  or  losses.*-^  In 
M'lver  V.  Humble,*^*  Lord  EUenborough  said:  "A  person  may  make 
himself  liable  as  a  partnei-  with  others  in  two  ways:  Either  by  par- 
ticipation in  the  loss  or  ynofits,  or  in  respect  of  his  holding  himself 
out  to  the  world  as  such,  so  as  to  induce  others  to  give  credit  on 
that  assurance."  It  will  be  readily  seen  that  the  rule  of  partnership 
liability  here  first  mentioned  does  not  apply  in  the  case  of  a  nominal 
partner,  because  he  does  not  participate  in  the  profits  at  all,  and  is, 
in  fact,  in  no  wise  a  partner,  within  the  technical  sense  of  the  word,^^' 

122  D.  S.  583.  7  Sup.  Ct.  1278;  Brown  v.  Pickard,  4  Utah,  292,  9  Pac.  573. 
Where  a  person,  by  his  conduct,  conversation,  admissions,  or  otherwise,  allows 
himself  to  be  held  out  as  a  nu'mber  of  a  prospective  firm,  and  thereby  a  third 
party  is  induced  to  credit  Buch  firm,  such  person,  to  the  extent  of  liability  thus 
incurred,  is  estopped  from  denying  the  existence  of  such  firm.  Moore  v.  Harper 
(W.  Va.)  24  S.  E.  ti33. 

228  2  H.  Bl.  235.  24G,  1  Smith.  Lead.  Cas.  (8th  Ed.)  1316.  See.  also.  Scarf  t. 
Jardine,  7  App.  Cas.  345. 

227  Ex  parte  Watson,  19  Ves.  461;    Kirkwood  v.  Cheetham,  2  Fost.  &  F.  798. 

a28  16  East,  169,  174. 

»2»  See  post,  p.  96.  Holdinj?  out  does  not  render  one  an  actual  partner.  Gra- 
benheimer  v.  Rindskofif,  64  Tex.  49.  But  au  allegation  of  a  partnership  in 
GEO.PAIiT.— 6 


82  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

His  liability  attaches  merely  through  the  operation  of  the  principle 
of  estoppel.  In  De  Berkom  v.  Smith,*'"  Lord  Kenyon  is  reported  as 
saying:  "Though,  in  point  of  fact,  parties  are  not  partners  in  trade, 
yet  if  one  so  represents  himself,  and  by  that  means  gets  credit  for 
the  goods  for  the  other,  both  shall  be  liable.''  The  liability  of  the 
person  holding  himself  out  is  not  the  less  either  if  he  has  been  in- 
duced by  the  others  to  do  so  through  fraud  or  promises  of  being 
shielded  from  responsibility,  provided  the  person  giving  credit  took 
no  part  in  the  promises  or  fraud. *'*  In  order  to  charge  a  person,  it 
is  not  necessary  that  the  holding  out  should  be  his  deliberate  act,  for 
his  liability  is  as  great  if  he  has  merely  permitted  himself  to  be  held 
out  as  a  partner  by  the  trader  himself,  although  the  theory  was  once 
advanced  that  the  extent  of  the  liability  differed  in  the  two  cases.'" 
A  mere  protest  to  the  trader  will  not  relieve  a  person  of  liability 
where  he  has  been  thus  held  out.  He  must  take  active  means  to 
warn  customers;    otherwise,  he  may  be  said  to  have  acquiesced.*" 

fact  1b  Bustained  by  proof  that  the  person  sought  to  be  charged  held  himself  out 
as  a  partner,  or  acquiesced  In  being  so  held  out  by  others.  Frank  v.  Hardware 
Co.  (Tex.  Civ.  App.)  31  S.  W.  04.  A  transfer  of  firm  assets  in  payment  of  a  bona 
fide  firm  debt  is  valid,  though  made  by  one  not  an  actual  piirtner,  if  he  has  been  pre- 
viously held  out  as  such,  and  the  purchasing  creditor  has  no  notice  prior  to  the 
consummation  of  the  Bale  that  the  supposed  co-partner  does  not  consent  thereto. 
More  V.  Dixon.  59  111.  App.  107.  One  who  holds  out  another  as  his  partner  will 
be  liable  as  such  for  the  acts  of  the  other  in  the  name  and  on  account  of  the 
firm,  if  within  the  scope  of  the  firm's  business,  though  he  was  not  consulted  in 
the  matter.  Hess  v.  Ferris,  57  111.  App.  37.  In  Guidon  v.  Kobson,  2  Camp.  302, 
Lord  Ellenborough  held  that  a  nominal  partner  must  join  as  plaintiff  in  an  action 
on  a  contract  made  in  the  firm  name.  But  see  Kell  v.  Nainby,  10  Barn.  &  O. 
20;  Bishop  v.  Hall.  9  Gray  (Mass.)  430;  Beudel  v.  Hettrick,  35  N.  Y.  Super.  Ot. 
405. 
2  80  1  Esp.  29. 

231  Lindl.  Partn.  p.  41;  Collingwood  v.  Berkeley,  15  C.  B.  (N.  S.)  145;  Mad- 
dlck  V,  Marshall,  16  C.  B.  (N.  S.)  387,  17  C.  B.  (N.  S.)  829;  Ellis  v.  Schmoeck, 
5  Bing.  521;    Ex  parte  Broome,  1  Rose,  69. 

232  J.  Pars.  Partn.  §  69. 

233  Smith  V.  Hill,  45  Vt.  90.  Cf.  Rittcnhouse  v.  Leigh,  .'57  Miss.  697.  See, 
generally,  Wright  v.  Boyutou,  37  N.  II.  9;  Ihmsen  v.  Lathrop,  104  Pa.  St.  365; 
Bowie  V.  Maddox,  29  Ga.  285;  Benjamin  v.  Covert,  47  Wis.  375,  2  N.  W.  025; 
Potter  V.  Greene,  9  Gray  (Mass.)  309;  Polk  v.  Oliver,  56  Miss.  566.  "If  he  is 
held  out  as  a  partner,  and  knows  it,  he  is  chargeable  as  one,  unless  he  does  all 
that   a   reasonable  and   honest   man   should    do   under   similar   circunistauces   to 


§    26)  PARTNERSHIP    BY    ESTOPPEL.  83 

If  the  effort  to  thus  hold  him  out  is  persistently  made  by  others,  he 
has  access  to  equity  to  restrain  the  persons  so  persisting.  Of  course, 
the  use  of  a  man's  name  without  his  knowledge  cannot  subject  him  to 
liability;"'*  but,  where  he  has  been  held  out  without  protest  on  his 
part,  circumstances  may  con\ict  him  of  having  such  knowledge.^^'* 
The  fact  alone  of  his  having  been  so  held  out  for  an  indefinite  period, 
without  malcing  any  effort  to  relieve  himself  of  the  repute  so  acquired, 
would  raise  a  presumption  of  acquiescence  on  his  part."^"  If  not  sui 
juris  at  the  time,  he  must  disaffirm  the  partnership  upon  becoming  so; 
otherwise,  he  may  be  considered  to  have  thus  acquiesced.^'^  The 
most  usual  case  of  holding  out  arises  from  a  failure  by  a  retiring  part- 
ner to  properly  notify  customers  of  his  severing  his  connection  with  the 
firm."'*      But  even  if  he  has  not,  upon  so  retiring,  published  the  fact, 

assert  and  manifest  his  refusal,  and  thereby  prevent  innocent  parties  from  being 
misled.  If  he  does  anything  which  might  fairly  produce  the  impression  that  he 
is  a  partner,  or,  when  another  does  this,  fails  to  do  what  he  should  to  remove 
or  prevent  this  impression,  then  he  is  as  much  liable  as  if  he  calls  himself  a  part- 
ner."    T.  Pars.  Partn.  (4th  Ed.)  §  95. 

234  Bates,  Partn.  §  95.  See  Ihmsen  v.  Lathrop,  104  Pa.  St.  365;  Bishop  v. 
Georgeson,  60  111.  484;  Kritzer  v.  Sweet,  57  Mich.  617,  24  N.  W.  764;  Slade  v. 
Paschal,  67  Ga.  541;  Rimel  v.  Hayes,  S3  Mo.  200,  209;  Cassidy  t.  Hall,  97 
N.  Y.  159;  Denithorne  v.  Hook,  112  Pa.  St.  240,  3  Atl.  777.  Cf.  Smith  v.  Hill, 
45  Vt.  90.  One  who  lends  money  to  a  firm  is  not  estopped  by  representations  of 
the  members  of  the  firm  that  such  money  constituted  part  of  the  capital,  where 
he  had  no  knowledge  of  such  representations.  Thomas  Adams  &  Co.  v.  Albert, 
87  Hun,  471,  34  N.  Y.  Supp.  328. 

230  Holland  v.  Long,  57  Ga.  30.  See  Craig  v.  Alverson,  6  J.  J.  Marsh.  (Ky.) 
G09;  Nicholson  v.  Moog,  65  Ala.  471.  "It  must  also  appear  that  the  holding 
out  was  by  the  party  sought  to  be  charged,  or  by  his  authority,  or  with  his 
knowledge  or  assent.  This,  where  it  is  not  the  direct  act  of  the  party,  may  be 
inferred  from  circumstances,  such  as  from  advertisements,  shop  bills,  signs,  or 
cards,  and  from  various  other  acts  from  which  it  is  reasonable  to  infer  that  the 
holding  was  with  his  authority,  knowledge,  or  assent."  Fletcher  v.  Pullen,  70 
Md.  205,  213,  16  Atl.  887,  888. 

28  6  Thompson  v.  Bank,  111  U.  S.  529,  537,  4  Sup.  Ct.  H89. 

237  Goode  V.  Harrison,  5  Barn.  &  Aid.  147  (infant);  Everit  v.  Watts,  10  Paige 
(N.  Y.)  85.  "It  is  an  anomaly  that  one  who  is  not  sui  juris  could  be  bound  as  a 
partner.  But,  if  he  does  not  disaffirm  the  partnership  when  he  becomes  sui  juris, 
he  will  be  a  partner,  and,  by  relation,  from  the  beginning."     J.  Pars.  Partn.  §  G9. 

238  See  post,  p.  257.  See,  also,  Newsome  v.  Coles,  2  Camp.  620;  Hastings  Nat. 
Bank  v.   Hibbard,  48  Mich.  452,  12  N.  W.  G51;    Boyd  v.  McCann,  10  Md.  118: 


84  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.    1 

he  is  not  liable  to  new  customers  of  the  firm  who  never  heard  of  him,"* 
although  the  old  ones,  who  still  deal  with  the  firm  relying  on  him,  are 
entitled  to  look  to  him  ^\ith  the  other  members  still.""  The  impres- 
sion under  which  the  third  person  acted  in  giving  credit  to  the  trader 
must  not  have  been  the  effect  of  a  mere  rumor  that  the  person  sought 
to  be  charged  was  a  partner.  The  information  must  have  been  some- 
what specific,  although  not  necessarily  direct,  upon  which  the  third 
person  acted  in  giving  the  credit.**^  Thus,  it  is  said  by  P;irke,  J.,  in 
Dickenson  v.  Valpy:**'^  "If  it  could  have  been  proved  that  the  de- 
fendant had  held  himself  out  to  be  a  partner,  not  'to  the  world,'  for 
that  is  a  loose  expression,  but  to  the  plaintiff  himself,  or  under  such 
circumstances  of  publicity  as  to  satisfy  a  jury  that  the  plaintiff  knew 
of  it,  and  believed  him  to  be  a  partner,  he  would  be  liable  to  the  plain 
tiff  in  all  transactions  in  which  he  engaged  and  gave  credit  to  the  de- 
fendant upon  the  faith  of  his  being  such  partner.  The  defendant 
would  be  bound  by  an  indirect  representation  to  the  plaintiff,  arising 
from  his  conduct,  as  much  as  if  he  had  stated  to  him  directly  and  in  ex- 
press terms  that  he  was  a  partner,  and  the  plaintiff  had  acted  on  that 
statement." 

In  no  case  can  liability  attach  to  the  nominal  partner  in  favor  of 
any  one  who  has  not  given  credit  in  full  faith  in  his  being  a  member  of 
the  firm,  for  it  is  there  that  the  element  of  cstopiK'l  comes  in,  which 
is  the  vital  element  in  the  situation.""      The  only  ground  for  charging 

Tregertheu  v.  Lohrnm,  6  Mo.  App.  576.  The  firm  of  J.  D.  P.  &  Co.  gave  plaintiff 
a  note,  after  which  a  notice  was  published,  and  seen  by  plaintiff,  stating  that  thi> 
partnership  formerly  existing  between  J.  D.  P.  and  A.  J.  G.,  under  the  firm  name 
of  J.  D.  P.  &  Co.,  is  dissolved,  and  that  the  business  wilj  be  carried  on  under  the 
firm  name  of  J.  B,  (i.  &  Co.,  who  will  settle  all  claims  of  the  late  partnership. 
Afterwards  plaintiff  surrendered  such  note,  and  took  a  note  signed  "J.  B.  G.  & 
Co.,"  believing  that  J.  B.  G.  &  Co.  was  a  firm  consisting  of  J.  B.  G.  and  A.  J.  G.; 
but  there  was  in  fact  no  such  firm,  the  business  being  conducted  under  such  name 
by  J.  B.  G.  alone.  Held,  that  A,  J.  G.  was  liable  on  the  new  note.  Thayer  v. 
Goss,  91  Wis.  90,  64  N.  W.  312. 

230  Carter  v.  Whalley,  1  Bam.  &  Adol.  11.    See  post,  p.  264. 

240  Sie  post.  p.  2C1. 

«*i  But  a  person  may  be  held  out,  although  his  name  is  concealed,  as  where  he 
is  referred  to  as  a  person  who  does  not  wish  to  have  his  name  disclosed.  See 
Lindl.  Partn.  p.  42;    Martyn  v.  Gray,  14  C.  B.  (N.  S.)  SL;4. 

242  10  Barn.  &  C.  128,  140. 

«43  In  Young  v.  A.\t(ll,  ciled  in  Waugh  v.  Carver,  2  H.  Bl.  242.  it  was  said  that 


§   26)  PARTNERSHIP    BY    ESTOPPEL.  8.'> 

such  a  person  as  a  partner  is  that,  by  his  conduct  in  holding  himself 
out  as  a  partner,  he  has  induced  persons  dealing  with  the  partnership 

to  believe  him  to  be  a  partner,  and,  by  reason  of  such  belief,  to  give 
credit  to  the  partnership.***     There  is  a  celebrated  case  in  the  books, 
where  a  retired  partner  had  not  used  diligence  to  have  his  name  re- 
moved from  the  firm's  place  of  business,  and  in  particular  from  a  cart 
used  in  the  business.      By  the  negligence  of  the  driver,  the  cart  was 
driven  over  a  pedestrian,  to  the  latter's  injury,  and  the  ex-partner  was 
made  liable  for  the  injury,  inasmuch  as  he  had  allowed  himself  to  be 
held  out  as  a  partner.**'     This  case  has  been  much  criticised,  and  un- 
it makes  no  difiference  in  such  a  person's  liability  that  the  party  seeliing  to  charge 
him  did  not  linow  at  the  time  when  he  gave  credit  to  the  firm  that  he  had  so  held 
himself  out.      With  reference  to  this  case  it  is  said  in  a  note  to  Waugh  v.  Carver, 
1  Smith,  Lead.  Cas.  (8th  Ed.)  1337:    "But  this  position  appears  very  questiona- 
ble;   for  the  rule  which  imposes  on  a  nominal  partner  the  responsibilities  of  a  real 
one  is  framed  in  order  to  prevent  those  persons  from  being  defrauded  or  deceived 
who  may  deal  with  the  firm  of  which  he  holds  himself  out  as  a  member,  on  the 
faith  of  his  apparent  responsibility.      But  where  the  person  dealing  with  the  firm 
has  never  heard  of  him  as  a  component  part  of  it,  that  reason  no  longer  applies, 
and  there  is  not  wanting  authority  opposed  to  such  an  extension  of  the  rule  re- 
specting a  nominal  partner's  liability."      In  Alderson  v.  Pope,  1  Camp.  404,  note, 
it  was  held  that  a  man  could  not  be  charged  as  a  partner  by  one  who,  when  he 
contracted,  had  notice  that  he  was  but  nominally  so.     Krans  v.  Luthy,  56  III. 
App.  506.     The  reason  of  this  must  have  been  because  he  could  not  have  been 
deceived,  or  induced  to  deal  with  the  firm,  by  any  reliance  on  the  nominal  part- 
ner's apparent  responsibility.     And  the  same  reason  precisely  applies,  whether  the 
false  impression  on  the  customer's  mind  has  been  put  an  end  to  by  a  notice,  or 
whether,  in  consequence  of  his   ignorance  that  the  nominal   partner's  name  has 
been  used,  no  false  impression  ever  existed  on  his  mind  at  all.      See  Webster  v. 
Clark,  34  Fla.  637,  16  South.  601;    Carter  v.  Whalley,  1  Barn.  &  Adol.  11;    Ford 
V.  Whitmarch  (Exch.,  Mich.  Term,  1840)  Hurl.  &  W.  53;    Pott  v.  Eyton,  3  C.  B. 
32;    Edmundson  v.  Thompson,  31  L.  J.  Exch.  207;    Stephens  v.  Reynolds,  2  Fost. 
&  F.  147.      A  person  cannot  be  held  liable  on  a  contract  on  the  ground  of  holding 
out,  unless  he  did  so  before  the  contract  was  made.     Baird  v.  Planque,  1  Fost. 
&  F.  344;    Howes  v.  Fiske  (N.  H.)  30  Atl.  351.     See,  generally,  Cornhauser  v. 
Roberts,  75  Wis.  554,  44  N.  W.  744;    Van  Kleeck  v.  McCabe,  87  Mich.  599,  49 
N.   W.  872;    Fletcher  v.  Pullen,  70  Md.  205,  16  Atl.  887;    Hahlo  v.  Mayer,  102 
Mo.  93,  13  S.  W.  804,  and  15  S.  W.  750;    Morgan  v.  Farrel,  58  Conn.  413,  20 
Atl.  614;    Webster  v.  Clark,  34  Fla.  637,  16  South.  601;    Knard  v.  Hill,  102  Ala. 
570,  15  South.  345. 

2**  Thompson  v.  Bank,  111  U.  S.  529,  4  Sup.  Ct.  689. 

S'is  Stables  v.  Elly,  1  Car.  &  P.  614. 


86  DEFINITION    AND    ESTABLISHMENT    OF    RELATION.  (Ch.   1 

favorably;  for  it  stands  to  reason  that  the  injured  party  had  not  suf- 
fered through  giving  credit  to  any  name  whatsoever.  As  Pollock 
says:  **"  "To  make  a  man  liable  in  tort  as  an  apparent  partner  seems 
to  involve  confusion  of  principles."  But  in  Young  v.  Axtell,**^  which 
arose  on  contract,  Lord  ^Mansfield  would  appear  to  have  been  quite  as 
indifferent  as  was  the  court  in  the  tort  case  to  the  principle  underlying 
responsibility  in  respect  of  persons  holding  out;  for  there  the  person 
made  responsible  had.  unknown  to  the  plaintiff,  held  herself  out  as  ;i 
partner,  so  that  credit  clearly  was  not  given  on  account  of  her  name. 
However,  it  has  been  supposed  in  some  quarters  that  Young  v,  Axtell 
was  reported  in  such  a  manner  as  to  do  injustice  to  Lord  Mansfield. 
Nevertheless,  this  precedent  seems  to  have  misled  the  court  in  the 
American  case  of  Poillon  v.  Secor.^*^  There,  instead  of  the  firm  desig- 
nation being  changed  in  respect  of  the  removal  from  it  of  the  surname 
of  the  retiring  partner,  a  person  of  the  same  surname  had  been  induced, 
in  consideration  of  $200,  to  have  that  part  of  the  designation  represent 
him,  although  otherwise  he  took  no  part  in  the  firm  or  its  business. 
This  person  was  subsequently  held  responsible  for  a  firm  debt,  without 
the  plaintiffs  being  required  to  show  that,  at  the  time  of  its  creation, 
they  knew  or  thought  that  defendant  was  a  partner ;  the  court  saying 
that  the  fact  of  defendant's  having  received  a  consideration  for  per- 
mitting the  use  of  his  name  in  the  firm  under  the  circumstances  was 
sufiicient  to  charge  him,  and  defining  the  object  of  the  rule  governing 
persons  holding  themselves  out  as  partners,  to  be  to  prevent  the  exten- 
sion of  unsound  credit,  which  the  court  said  was  "a  clear  recognition  of 
the  element  of  public  policy  underlying  the  rule  of  Lord  Mansfield."  '** 
If  the  plaintiff  had,  at  the  time  the  debt  was  contracted,  been  aware 
of  aJl  the  facts  subsequently  learned  by  him,  then  the  party  held  liable 

246  Pol.  Partn.  (3d  Ed.)  p.  2B. 

247  Cited  in  Waugh  v.  Carver,  2  H.  Bl.  242. 

248  61  N.  Y.  456.      Cf.  Thompson  v.  Banlj,  111  U.  S.  521),  4  Sup.  Ct.  689. 

249  Mr.  James  Parsons  explains  the  decision  In  this  case  on  the  theory  that  "ev- 
ery one  dealing  with  the  firm  relies  upon  a  partner  behind  the  name,  and,  upon 
finding  him,  holds  him,  without  anything  more."  Partn.  (Index)  p.  657.  But  the 
question  is,  is  not  this  a  new  principle  again?  However  Mr.  Parsons  may  thus 
vindicate  the  ultimate  justice  of  the  disposition  of  the  case,  the  explanation  does 
not  seem  to  bring  the  court's  ruling  within  the  principle  of  estoppel  by  conduct, 
which  can  only  conclude  the  defendants  with  respect  to  those  who  have  altered 
their  condition  on  the  faith  of  the  representations  being  true. 


§    26)  PARTNERSHIP    BY    ESTOPPEL.  87 

would  have  been  properly  so  held,  beyond  all  doubt.  His  stipulating 
for  indemnity  for  the  use  of  his  name,  and  the  plain  inference  there- 
from that  he  was  not  a  partner  in  the  common  sense,  would  not  have 
rendered  him  any  the  less  to  be  relied  on  by  third  persons,  since  by  the 
sole  act  of  lending  his  name  he  had  invited  such  reliance;  for  one  actual- 
ly holding  himself  out  may  be  liable,  even  where  it  is  known,  by  the 
party  giving  credit  on  faith  of  his  name,  that  he  intended  to  participate 
in  neither  profits  nor  losses.^**"  The  question  of  whether  one  has  held 
himself  out  as  a  partner  in  any  given  case  is  a  mixed  question  of  law 
and  fact,  just  as  is  always  the  question  whether  a  partnership  has  ex- 
isted or  not,  ^''^  The  judge  is  to  instruct  so  as  to  let  the  jury  know 
what  constitutes  a  holding  out,  leaving  then  to  the  jury  the  province  of 
finding  whether  the  essentials  so  charged  have  been  proved  to  exist 
by  the  testimony  produced.^"** 

2  60  "His  name  does  not  induce  credit  the  less  on  account  of  his  right  to  be  in- 
demnified by  others  against  any  loss  falling  in  the  first  instance  on  himself;  and 
although,  in  the  case  supposed,  he  cannot  be  believed  to  be  a  partner,  the  lending 
of  his  name  does  justify  the  belief  that  he  is  willing  to  be  responsible  to  those 
who  may  be  induced  to  trust  him  for  payment."  Lindl.  Partn,  p.  40.  See 
Brown  v.  Leonard,  2  Chit.  120;    but  see  Alderson  v.  Pope,  1  Camp.  404,  note. 

251  See  ante,  p.  33. 

262  Seabury  v.  Bolles,  51  N.  J.  Law,  103,  16  Atl.  54;  Id.,  52  N.  J.  Law,  413, 
21  Atl.  952;  Fletcher  v.  Pullen,  70  Md.  205,  16  Atl.  887.  "Whether  a  defendant 
has  or  has  not  held  himself  out  to  the  plaintiff  is  in  every  case  a  question  of  fact, 
not  a  question  of  law,  and  the  consequence  is  that  there  is  great  apparent  conflict 
in  the  cases  on  this  head.  In  Wood  v.  Duke  of  Argyll,  6  Man.  &  G.  928,  and  in 
Lake  v.  Duke  of  Argyll,  6  Q.  B.  477,  the  very  same  acts  were  relied  on  as  a  holding 
out,  viz.  being  advertised  as  president  of  a  society,  acting  as  president  at  a  meet- 
ing, and  signing  some  resolutions  then  agreed  upon.  In  the  first  case,  this  was 
considered  not  sufficient,  and  the  defendant  had  a  verdict;  whilst  in  the  last  it 
was  considered  to  be  eufflcient,  and  the  plaintiff  had  a  verdict.  The  jury  was 
asked  whether  the  defendant  had  held  himself  out  as  intending  to  pay  for  the 
work  charged,  and  the  question  was  answered  in  the  affirmative  in  the  one  case, 
and  in  the  negative  in  the  other,  and  the  court  in  each  case  refused  to  disturb 
the  Teriict."     Lindl.  Partn.  p.  44. 


88  KINDS    OF    PABTNERSHIPS   AND    PABXNEBA.  (Cb.  2 

CHAPTER  H. 

KINDS  OF  PARTNERSHIPS  AND  PARTNERa 

27.  Classification  of  Partnerships. 

28.  Ordinary  Partnerships — Universal,  General,  and  SpeciaJ  or  Particular. 

29.  Limited  Partnerships. 

30.  Joint-Stock  Companies. 

31.  Trading  and  Nontrading  Partnerships. 

32.  Mining  Partnerships. 

83.    Classification  of  Partners. 

CLASSIFICATION  OF  PARTNERSHIPS. 

87.  Partnerships  may  be  divided  into  three  classes: 

(a)  Ordinary  partnerships  (p.  88). 

(b)  Limited  partnerships  (p.  90). 

(c)  Joint-stock  companies  (p.  90). 

ORDINARY    PARTNERSHIPS— UNIVERSAL,    GENERAL,    AND 
SPECIAL  OR  PARTICULAR. 

28.  Ordinary  partnerships  may  be   divided,  in  respect  to 
their  extent,  into  three  classes; 

(a)  Universal  partnerships. 

(b)  General  partnerships. 

(c)  Special  or  particular  partnerships. 

Universal^  General^  cmd  Special  or  Particida/r  Partnerships, 

A  universal  partnership  would  exist  if  the  parties  agreed  to  bring 
into  the  firm  all  their  property,  and  to  employ  all  their  skill,  labor, 
and  services  in  business  for  their  mutual  benefit,  so  that  there  would 
be  an  entire  community  of  interest  between  them.^  Theoretically, 
such  a  relation  is  possible,  and  in  this  country  there  are  several  cases 
which  approach  it  very  nearly.*     But  such  partnerships  are  nat- 

1  Story,  Partn.  §  71. 

2  Gray  v.  Palmer,  9  Cal.  616;    Gasely  v.  Society,  13  Ohio  St.  144;    Lyman  v. 
Lyman,   2   Paine,   11,   Fed.    Cas.   No.   8,62iJ;    Goesele  v.    Bimeler,    14   How.   5>S1): 


§    28)  ORDINARY    PARTNERSHIPS.  89 

urally  of  very  rare  occurrence,  and  must  be  clearly  established,  for 
tliey  will  not  readily  be  presumed. 

A  general  partnership  is  one  where  the  partners  have  associated 
together  for  the  purpose  of  transacting  a  branch  of  trade  or  busi- 
ness which  is  more  or  less  permanent,  whereas  a  special  or  partic- 
ular partnership  is  one  for  the  transaction  of  a  single  venture.' 
These  divisions  are  of  no  particular  importance. 

Houston  V.  Stanton,  11  Ala.  412;  iJaker  v.  Nachtrieb,  ID  How.  12(5;  Rice  v. 
Barnard,  20  Vt.  479;  Hamilton  v.  Halpin,  68  Miss.  99,  8  South.  739.  "There  is 
probably  no  such  thing  as  a  universal  partnership,  if,  by  the  terms,  we  are  to  un- 
derstand that  everything  done,  bought,  or  sold  is  to  be  deemed  on  partnership  ac- 
count. Most  men  own  some  real  or  personal  estate,  which  they  manage  exclu- 
sively for  themselves."  United  States  Bank  v.  Binuey,  5  Mason,  176,  183,  Fed. 
Cas.  No.  16,791.  By  the  law  of  Mexico  in  force  in  California  before  its  cession 
to  the  United  States,  the  partnership  relation  existed  between  the  husband  and 
wife  in  all  property  acquired  by  the  spouses  by  their  labor,  and  in  the  income  of 
the  individual  property  of  either,  and  in  the  gains  of  the  husband  by  the  exercise 
of  a  profession  or  office,  and  also  in  the  gains  from  the  money  of  the  spouses, 
although  the  capital  was  the  separate  property  of  one  of  them.  Fuller  v.  Fergu- 
son, 26  Cal.  546. 

3  "A  general  partnership  is  one  created  for  the  purposes  of  some  general  kind 
of  business,  or  of  a  number  of  kinds  of  business.  A  special  or  particular  partner- 
ship is  one  created  for  a  single  transaction  or  adventure."  Mechem,  Fartn.  §  15. 
"A  particular  partnership  is  one  where  the  parties  have  united  to  share  the  bene- 
fit of  a  single  individual  transaction  or  enterprise.  A  general  partnership  is  one 
where  they  have  united  for  the  general  purposes  of  some  kind  of  business."  Bates, 
Partn.  §  12.  "Special  partnerships  relate  only  to  an  ownership  or  use  or  employ- 
ment by  partners  of  one  thing,  or  one  cargo,  or  one  mercantile  adventure."  T. 
Pars.  Partn.  §  40.  There  has  been  a  good  deal  of  confusion  in  the  definition  and 
use  of  these  terms.  Thus  Story  says:  "General  partnerships  are  properly  such 
where  the  parties  carry  on  all  their  trade  and  business,  whatever  it  may  be,  for 
the  joint  benefit  and  profit  of  all  the  parties  concerned,  whether  the  capital  stock 
be  limited  or  not,  or  the  contributions  thereto  be  equal  or  unequal,"  This  defi- 
nition would  make  the  term  "general  partnership"  synonymous  with  "universal 
partnership."  Story  follows  this  up  by  saying:  "But  where  the  parties  are  en- 
gaged in  one  branch  of  trade  or  business  only,  the  same  application  is  ordinarily 
applied  to  it."  But  this  last  class  falls  squarely  within  his  definition  of  specia* 
partnerships,  which  is  as  follows:  "Special  partnerships,  in  the  sense  of  common 
law.  are  those  which  are  formed  for  a  special  or  particular  branch  of  business,  as 
contradistinguished  from  the  general  business  or  employment  of  the  parties,  or  of 
one  of  them."  Section  75.  "They  are  more  commonly  called  'limited  partner- 
shijis'  when  they  extend  to  a  single  transaction  or  adventure  only;  such  as  the 
purchase  and  sale  on  joint  account  of  a  particular  parcel  of  goods,  or  the  under- 


90  KINDS    OF    PARTNERSHIPS    AND    PARTNERS.  (Cll.   2 


LIMITED  PARTNERSHIPS. 

29.  "A    limited    partnership    is   a    partnership   in   -which 

the  liabilities  of  some  of  its  members  to  bear  losses 
is  restricted  to  a  defined  amount."* 

In  the  "ordinary"  partnership  each  of  the  partners  is  severally 
liable  for  firm  debts,  but  in  the  "limited"  partnership  this  several 
liability  does  not  affect  all  the  partners  to  the  full  extent  of  such 
debts.  At  common  law,  partners  were  invariably  liable  for  the 
full  amount  of  partnership  debts.  Limited  partnerships,  therefore, 
exist  solely  by  virtue  of  statutes.* 

JOINT-STOCK  COMPANIES. 

30.  A  joint-stock  company  is  a  partnership  -with  a  capital 

divided  into  transferable  shares. 

There  is  still  another  sort  of  business  relation  (in  vo^e  in  Eng- 
land more  than  in  this  country)  that  comes  within  the  realm  of 
partnership  law  to  some  extent.  The  reference  is  to  what  are  known 
as  joint-stock  companies.'     Resort  is  had  to  this  mode  of  associa- 

taking  of  a  voyage  or  adventure  to  foreign  parts  upon  joint  account.  But  the  ap- 
pellation may  be  applied  indifferently,  and  without  discrimination,  to  both  classes 
of  cases."  Story,  Partn.  §  75.  it  will  be  observed  that  according  to  Story  these 
terms  have  no  definite  meaning  whatever,  and  leave  the  mind  hopelessly  confused. 
"It  must  be  noticed,  however,  that  these  names  'limited  partnership'  and  'general 
partnership'  thirty  or  forty  years  ago  meant  something  very  different,  and  denoted 
respectively  a  partnership  whose  scope  or  objects  were  restricted  to  a  certain  class 
of  business  or  particular  adventures,  or  were  not  so  restricted.  But  an  abandon- 
ment of  the  term  'general'  in  the  sense  of  'universal'  will  be  no  loss;  for  a  part- 
nership without  any  limitation  as  to  its  scope  and  purposes  is  an  anomaly,  and, 
at  least  as  far  as  I  can  discover,  there  are  but  four  cases  on  record  of  such  gen- 
eral hotchpot  or  communistic  concern."  Bates,  Lim.  Partn.  §  1,  citing  cases  in 
note  2,  supra. 

*  Bates,  Lim.  Partn.  S  1- 

B  See  post,   c.  10. 

8  See  post,  c  11.  Bee,  also,  Add.  Cent.  805:  Lindl.  Partn.  75(>:  Beach,  Priv. 
Corp.  107. 


§    31)  TRADING    AND    NONTRADING    PARTNERSHIPS.  91 

tion  usually  in  cases  where  the  business  enterprise  is  of  a  more  ex- 
tensive and  elaborate  nature  than  what  falls,  as  a  rule,  within  the 
compass  of  ordinary  partnerships.''  In  England  the  incorporation 
of  companies  is  not  the  common  thing  it  is  here,  and,  indeed,  is 
granted  only  in  rare  instances;  *  and  whereas,  in  America,  persons 
would,  in  contemplation  of  embarking  in  such  enterprises,  form 
themselves  usually  into  corporations  under  the  laws  of  the  several 
states,  in  England  resort  would  be  had  by  such  persons  to  the 
establishment,  under  somewhat  similar  laws  there,  of  these  joint- 
stock  companies;  the  purpose  in  each  case  being  escape  by  the 
individual  of  liability,  to  the  full  extent,  for  the  debts  of  the  asso- 
ciation. The  business  management  of  these  companies  is  committed 
to  a  board  of  directors,  just  as  is  the  case  with  corporations;  similar- 
ly, too,  the  capital  is  divided  into  shares,  and  each  shareholder  par- 
ticipates in  the  profits  in  proportion  to  his  holdings.  These  shares, 
as  in  the  case  of  a  corporation,  but  not  as  in  the  case  of  a  partner- 
ship, are  assignable  at  the  will  of  the  holder.®  Finally,  "the  rights 
inter  se  of  the  members  of  a  joint-stock  company  are  regulated  by 
the  joint-stock  companies  acts,^°  and  by  the  memorandum  and  arti- 
cles of  association.  When  these  are  silent,  the  ordinary  law  of  part- 
nership applies."  "  Thus,  in  the  absence  of  statute,  the  members  of 
a  joint-stock  company,  like  the  members  of  an  ordinary  pai'tnership, 
are  individually  liable  for  all  the  debts  of  the  company.*' 

TRADING  AND  NONTRADING  PARTNERSHIPS. 

31.  A  trading  partnership  is  one  engaged  in  buying  and 
selling  as  a  business. 

"The  test  of  the  character  of  the  partnership  is  buying  and  sell- 
ing. If  it  buys  and  sells,  it  is  commercial  or  trading.  If  it  does 
not  buy  or  sell,  it  is  one  of  employment  or  occupation."  "  "Trad- 
ing," in  its  business  sense,  signifies,  as  a  rule,  the  buying  to  sell 

1  Add.  Cont.  (8th  Ed.,  Abbott's  Notes)  805.  «  Id.  »  See  ante,  p.  4. 

10  25  &  26  Vict.  c.  89;    30  &  31    Vict.  c.  131.      See,   also,   N.   Y.   Laws  1881, 
c.  599:    Laws  18U8,  c.  290;    Laws  1867,  c.  289;    Laws  1854,   c.  245. 
"Add.   Cont.   805.  12  gee  post,  p.  501. 

13  Lee  V,  Bank,  45  Kan.  8,  25  I*nc.  19(3. 


92  KINDS    OF    PARTNERSHIPS    AND    PARTNERS.  (Ch.  2 

again;  but  what  are  known  as  trading  partnerships  include  also 
partnerships  formed  for  manufacturing  or  mechanical  purposes. 
The  importance  of  the  distinction  between  trading  and  nontrading 
partnerships  lies  in  the  fact  that  it  is  only  in  the  case  of  trading  part- 
nerships that  a  partner  has  implied  power  to  borrow  money  and  give 
firm  mercantile  paper  therefor.  This  subject  will  be  treated  more 
at  length  hereafter.^* 

Trading  and  nontrading  partnerships  may  be  either  general  or 
special,  ordinary  or  limited. 

MINING  PARTNERSHIPS. 

32.  Where  tenants  in  common  of  a  mine  "work  it  to- 
gether, and  divide  the  profits  in  proportion  to  their 
interests,  they  are  mining  partners.^" 

Mining  partnerships,  as  the  name  imports,  are  established  for  the 
purpose  of  prosecuting  mining  operations.  They  are  a  cross  be- 
tween tenancies  in  common  and  partnerships  proper.^*  Their  chief 
peculiarity  is  the  absence  of  the  delectus  personarum,  which  is  es- 
sential to  a  true  partnership.  The  shares  of  a  mining  partnership 
can  be  assigned  ad  libitum,  and  the  death  of  a  partner,  or  his  re- 
tiring from  the  firm,  does  not  dissolve  the  partnership.^'  But  there 
is  nothing  in  the  nature  of  mining  which  forbids  a  contract  of  strii't 
partnership;  and  when  it  appears  that  the  confidential  relations  of 
an  ordinary  partnership  are  established,  and  the  finn  not  subject 
to  the  intrusion  of  other  partners  at  will, — that  is,  where  there  is  a 
delectus  personte, — the  ordinary  incidents  of  partnership  attach." 

1*  See  post,  p.  224.  »»  Nolan  t.  Lovelock.  1  Mont.  224. 

16  Bates,  Partn.  §  14.  it  Kahn  v.  Smelting  Co.,  102   U.  S.  641. 

18  Decker  v.  Howell,  42  Cal.  636.  Of.  with  the  case  of  joint  owners  of  ships, 
ante,  p.  8,  and  notes  21  and  22. 


§   33)  CLASSIFICATION   OF   PARTNERS.  98 

CLASSIFICATION  OP  PARTNERS. 

33.  Partners  have  been  divided  into  various  classes,  such  as: 

(a)  General  (p.  93). 

(b)  Special  (p.  93). 

(c)  Ostensible  (p.  93). 

(d)  Secret  (p.  94). 

(e)  Silent  (p.  94). 

(f )  Dormant  (p.  r)5). 

(g)  Nominal  (p.  96). 

These  classes  are  not  necessarily  mutually  exclusive,  nor  are  the 
distinctions  between  them  of  much  importance,  except  in  the  case 
of  jjeneral  and  special  partners.  For,  although  there  recur  in  the 
books  again  and  again  sucn  words  as  "ostensible,"  "secret,"  "silent," 
"dormant,"  "nominal,"  etc.,  in  connection  with  the  word  "partner," 
each  has  its  effect  to  qualify,  like  any  other  adjective,  the  adjacent 
word,  rather  than  to  furnish  the  subject  in  any  way  with  a  separate 
classification.  It  will  be  useful,  however,  to  briefly  consider  the 
meaning  and  use  of  each  of  these  terms. 

General  am.d  Special  Partners, 

A  general  partner  is  one  whose  liability  for  partnership  debts  is 
unlimited;  who  is  liable  in  solido.  All  members  of  ordinary  part- 
nerships are  necessarily  general  partners.  The  term,  as  used  in 
this  connection,  has  nothing  to  do  with  the  division  of  ordinary  part- 
nerships into  universal,  general,  and  special  partnerships.^"  A  spe- 
cial partner  is  one  whose  liability  for  firm  debts  is  limited  to  a  de- 
fined amount.  Necessarily,  such  partners  exist  only  in  the  case  of 
limited  partnerships.  All  the  partners,  however,  in  a  limited  part- 
nership, are  not  special  partners.  There  must  always  be  one  or 
more  general  partners,  as  well  as  one  or  more  special  partners.''* 

Ostensible  Partners, 

An  ostensible  partner  is  one  whose  connection  with  the  firm  is 
openly  avowed.     This  connection  may  appear  by  means  of  the  firm 

i»  See  ante,  p.  8S. 

20  As  to  general  and  special  partners,  see  post,  e.  10,  "Limited  Partnerships." 


94  KINDS    OF    PARTNERSHIPS    AND    PARTNERS.  (Ch.   2 

sign  or  otherwise,  the  significance  of  the  description  being  that  there 
is  no  concealment  about  his  relation  to  the  firm.*^ 

Secret  Partners. 

A  secret  partner  is  one,  on  the  other  hand,  whose  connection  with 
the  firm  is  concealed,  or  at  least  is  not  announced  or  made  known 
to  the  public.*'' 

Silent  Partners. 

A  silent  partner,  while  having  his  right  to  a  share  of  the  firm 
profits  as  a  partner,  yet  is  tacit ;  that  is,  has  no  voice  in  the  manage- 
ment of  the  partnership  business.    Although  the  true  character  of 
a  partner  depends  on  his  being  at  once  a  principal  and  agent,  yet 
the  power  of  some  particular  partner  to  bind  the  firm  may  be  re- 
stricted by  an  agreement  between  the  parties  themselves.     Such  a 
restriction  would  not,  of  course,  be  allowed  to  work  to  the  detri- 
ment of  a  third  person  deeming  himself,  upon  good  grounds  of  be- 
lief, in  dealing  with  a  partner,  to  be  dealing  with  the  firm.     Yet 
the  mere  fact  that  one  is  a  partner— that  fact  being  at  the  time  un- 
known to  the  third  person— will  not  probably,  if  such  partner  is 
under  such  a  restriction  meanwhile,  render  the  firm  liable,  although 
the  representation  was  that  the  firm  was  being  dealt  for.     In  the 
case,  for  instance,  of  a  dormant  partner, — a  partner  who  is  both 
secret  and  silent,  as  will  appear  below, — if  the  third  person  took  him 
on  his  own  representations  merely,  not  knowing  him  to  be  a  part- 
ner otherwise,  that  third  person  was  put  suflQciently  on   inquiry 
to  relieve  the  firm  of  liability  for  the  dormant  partner's  unauthorized 
acts.     The  question  does  not  seem  to  have  been  satisfactorily  de- 
cided as  to  what  notice  is  sufficient  to  relieve  the  firm  from  liability 
to  third  persons  who  have  dealt  with  a  partner  restricted  in  his 
authority  to  act  for  the  firm.    Lindley  says  that  it  must  be  explicit, 
a  distinct  warning,  in  fact,  that  the  firm  will  not  be  responsible 
for  the  acts  of  such  a  partner;   for,  he  argues,  a  private  agreement 
within  the  firm  may  be  perfectly  consistent  with  an  intention  that 
the  firm  shall  still  be  liable  notwithstanding  the  restriction,  the  real 
effect  of  the  agreement  being  that  such  partner  shall  reimburse  the 
firm  after  it  has  suffered  by  his  acting  in  the  face  of  the  agree- 

»i  Bates,  Partn.  §  9.  **  Bates,  Partn.   §   10. 


§   33)  CLASSIFICATION    OF    PARTNERS.  95 

ment."  And  Pollock,**  commenting  on  this  view  of  the  subject, 
cites  the  case  of  Brown  v.  Leonard,^ ^  not  as  directly  in  point,  but 
as  affording  an  illustration  of  how  far  a  third  person  dealing  with 
a  firm  is  bound  by  a  mere  casual  statement  of  the  nonliability  of 
an  apparent  partner.  There  the  latter  had  informed  the  third  per- 
son that  he  had  ceased  to  be  a  partner,  although  his  name  was  to 
continue  in  the  firm  for  a  certain  time;  and  it  was  held  by  the 
court  that  the  statement  was  no  disclaimer.  There  is  no  special 
form  of  words  recognized  as  necessary  to  convey  such  notice,  and  no 
especial  method  of  conveying  it,  if  only  notice  in  some  form  reaches 
the  person  who  is  about  to  give  the  credit.  The  sufiQciency  of  the 
notice  is,  it  was  held  in  Vice  v.  Fleming,**  a  question  for  the  jury. 
In  the  latter  case,  Garrow,  B.,  said:  "All  the  partners  of  a  firm 
are  liable  for  the  debts  contracted  by  that  finn,  but  this  responsi- 
bility may  be  limited  by  express  notice  by  one  that  he  will  not  be 
liable  for  the  acts  of  his  co-partners.  The  question  is  whether  the 
defendant  has  done  that  in  this  case.  He  states  the  then  condition 
of  the  firm,  and  says,  *A  new  order  of  things  is  about  to  take  place, 
by  which  I  shall  be  discharged  from  all  future  liability;'  not  *I  will 
not  be  responsible,'  but  'I  have  sold  my  share,  and  shall,  in  conse- 
quence, be  discharged.'  If  the  notice  had  been  of  the  former  de- 
scription, the  plaintiff  might  have  declined  to  supply  the  mine  for 
the  future ;  but  when  he  is  told  the  responsibility  of  others  is  to  be 
substituted  for  that  of  the  defendant,  he  is  induced  to  continue  the 
supplies  upon  the  credit  of  the  supposed  new  partner ;  and,  as  none 
such  existed,  I  think  the  defendant,  so  long  as  he  remained  a  part- 
ner, was  liable." 

Dormant  Partners. 

A  dormant  partner  combines  in  himself  the  characters  of  both  the 
secret  and  the  silent  partners."  Whether  or  not  he  seeks  to  with- 
hold from  the  public  the  fact  that  he  is  a  partner,  he  is  not  pub- 
lished as  one  through  the  firm  name  or  otherwise;  but  he  is  one 
nevertheless,  although  by  mutual  agreement  of  all  the  partners  he 

23  Lindl.   Fartn.  p.   174.  See  Gallway  v.  Mathew,   10  East,  204;    Alderson   t. 
Pope,  1  Camp.  404,  note. 
2  4  Pol.  Partn.  art.  20.  26  1  Younge  «&  J.  227. 

2  5  2  Chit.  120.  2  7  See  Bates,   Partn.  §  10. 


96  KINDS   OP   PARTNERSHIPS    AND   PARTNERS.  (Ch.   2 

does  not  transact  any  of  the  business  of  the  firm.  Being  thus  a 
partner,  however,  he  maintains  the  relation  of  principal  to  the  agent 
or  fellow  partner,  who  does  transact  firm  business;  and  in  this  re- 
spect he  is  to  be  distinguished  from  a  person  who  shares  profits  of 
a  business  carried  on  by  others,  not  as  the  agents  of  such  a  person, 
but  on  their  own  account  as  principals.  Under  the  decision  in  Cox 
V.  Hickman,^^  this  person  has  no  partnership  liability,  whereas  the 
dormant  partner  has,  and,  when  discovered,  will  be  held  to  it,  even 
where  he  has  attempted  to  disguise  himself  as  a  lender;  as  was 
the  case  in  Pooley  v,  Driver.^^  He  may  be  said  to  be  always  at  the 
mercy  of  others  in  respect  of  being  subjected  to  the  payment  of 
debts  which  he,  but  for  them,  might  escape;  being  liable  to  be  so 
subjected  at  any  time  by  his  membership  in  the  firm  being  exposed 
through  accident  or  design.  This  secret  being  once  divulged,  he  is 
a  disclosed  principal,  and  liability  for  firm  debts  and  obligations 
adheres  to  him  as  well  under  the  law  of  principal  and  agent  as  of 
partnership.  But,  if  his  connection  with  the  firm  is  not  thus  dis- 
closed, and  he  at  length  ceases  to  be  a  partner,  knowledge  thereafter 
•jf  the  old  connection  will  not  avail  any  one  then  trading  with  the 
firm  in  seeking  to  fix  a  liability  on  him.  From  this  principle  the 
maxim  has  arisen  that  "a  dormant  partner  may  retire  from  the  firm 
without  giving  notice  to  the  world."  ^°  He  is  still  liable,  however, 
for  firm  debts  contracted  before  his  retirement;  '^  and  a  creditor 
of  two  partners,  one  of  whom  he  is  not  aware  of,  can  hold  the  latter 
after  his  retirement,  notwithstanding  any  arrangement,  short  of  the 
extinguishment  of  the  debt,  previously  had  with  the  partner  then 
known,  for  in  his  ignorance  of  having  a  security  the  creditor  could 
not  release  it." 

Nominal  Partners, 

A  nominal  partner  is  the  expression  used  to  describe  a  person  who 
has  acquired  the  name,  with  outside  persons,  of  being  a  partner  with- 
out necessarily  participating  in  the  profits.  Liability  attaches  to 
bdm  by  reason  of  his  own  act  or  negligence  alone,  another  not  being 

28  8  H.  L.  Cas.  268.  29  5  Ch.  Div.  458. 

«o  See  post,  p.  264;  CJarter  ▼.  Whalley,  1  Barn.  &  Adol.  11;    Lindl.  Partn.  p.  21 'J 

«i  Lindl.  Partn.  p.  178. 

*2  Lindl.  Partn.  p.  245,  citing  Kobiuson  v.  Wilkinson,  3  Price.  538. 


§    33)  CLASSIFICATION    OF    PARTNERS.  97 

able  to  subject  him  to  it  What  are  known  as  partners  by  holding 
out  come  within  this  description.  Such  a  person,  having  courted  lia- 
bility for  the  firm's  debte,  can  in  certain  cases  be  made  to  pay  them, 
notwithstanding  his  not  being  really  a  member  of  the  firm.** 

3  3  See  ante,   p.  80,  "Partnership  by  EstoppeL" 
GBO.PART.— 7 


98  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.  3 

CHAPTER  irL 

CHARACTERISTIC  FEATURES  OF  PARTNERSHIPS. 

84-85.  Partnership  as  an  Entity— Legal  and  Mercantile  View. 

36.  Partnprship  Name. 

87-38.  Partnership  Property. 

89.  Partnership  CapitaL 

40.  Contributions  Other  than  In  Money. 

41^2.  Partners'  Rights  as  to  Capital. 

43.  Advances  by  Partner. 

44.  Limitations  as  to  Contributions  to  CapitaL 

45.  Partnership  Property  in  General. 

46.  What  Constitutes. 

47.  Property  Habitually  in  Use  of  Firm. 

48.  Property  Purchased  with  Partnership  Funds. 

49.  Title  to  Real  Estate. 

50.  When  Partnership  Realty  Deemed  Personalty. 

51-5?  Conversion  of  Partnership  Property  into  Separate  Property,  and 
Vice  Versa. 

^S.  Partnership  Shares. 

54-55.  Nature  of  Partner's  Interest, 

5&-67.  Amount  of  Each  Partner's  Share. 

58.  Sale  of  Partner's  Interest  on  Execution, 

59-^0.  Transfer  of  Shares. 

PARTNERSHIP  AS  AN  ENTITY  — LEGAL  AND  MERCANTILE 

VIEW. 

34.  The  common  law  does  not  recognize  a  partnership  as 

an  entity  existing,  and  having  rights  and  liabili- 
ties, apart  from  its  members.  Merchants  generally 
do  regard  a  partnership  as  such  an  entity. 

35.  The  term  "a  firm"  is  a  conventional  phrase  expressive 

of  the  partnership  as  distinct  from  its  members. 

What  is  known  as  the  "firm"  is  the  aggregation  of  the  individ- 
uals composing  the  partnership  in  their  character  as  partners.  The 
word  is  a  conyenience,  as  it  dispenses  with  the  necessity  of  some 
little  circumlocution  at  times  in  expressing  a  simple  idea;  for  in- 
stance, when  it  is  desired  by  partners  and  others  to  speak  of  the 
partnership  in  contradistinction  to  the  partners,  and  of  the  part- 


§§   34-35)  PARTNERSHIP    AS    AN    ENTITY.  99 

ners  in  contradistinction  to  the  partnerskip.  It  is  properly  an  ex- 
pedient for  escape  from  a  clumsy  mode  of  expression,  rather  thai* 
anything  else.  The  form  of  the  word,  as  employed,  is  about  equal 
to  the  abstract  idea  of  partnership,  and  the  words,  "house,"  "con- 
cern," "company,"  are  frequently  used  with  a  like  significance;  all 
being  merely  conventional  terms,  except  that,  as  a  means  of  iden- 
tifying contracting  parties,  they  are  given  importance  if  evidence 
is  forthcoming  to  show  just  who  were  members  of  the  partnership 
at  the  time  of  acts  done  in  the  firm  name,  such  members  being  bound 
by  such  acts,  providing  they  were  done  by  a  person  properly  author- 
ized. 

Legal  and  Mercantile  Yiews  Contrasted. 

The  law  gives,  technically,  a  partnership  scant  recognition,  ex- 
cept as  respects  its  individual  members,  so  that  the  "firm,"  as  some- 
thing other  than  its  individual  members,  is  known  rather  to  the  lay 
community  than  to  the  courts.^  So  it  has  come  about  that  such  a 
manner  as  this  latter  one  of  regarding  a  partnership  is  said  to  be 
the  mercantile,  in  contradistinction  to  the  legal,  view.  It  will  be 
found  that  partners,  in  their  dealings  with  each  other  as  such,  usual- 
ly regard  the  situation  with  reference  only  to  the  relation  of  each 
of  them  to  the  firm.  If  the  same  individuals  compose  two  firms, 
of  different  names  and  localities,  these  individuals  will  regard  these 
firms  as  wholly  distinct  from  each  other,  and,  in  all  their  dealings, 
will  preserve  this  distinction  in  their  accounts.  If  the  firm  of  Smith 
&  Brown  is  indebted  to  William  Jones,  Jones  looks  for  payment, 
properly,  according  to  the  legal  view  of  a  partnership,  to  John 
Smith  and  Thomas  Brown,  the  partners  composing  the  firm;  but 
Smith  or  Brown  regards  this  as  a  "firm  debt,"  for  which  he  per- 

1  This  view,  although  thus  generally  discredited  in  law  at  this  time,  seems  to 
have  the  merit  of  age  to  recommend  it.  Mr.  Parsons  tells  us  that  it  is  a  relic 
of  feudal  times,  and  is  tinctured  with  the  old  feudal  ideas  of  property,  which 
cling  still  to  the  law  of  real  estate,  the  genius  of  modern  jurisprudence  having 
ordained  differing  modes  of  treatment  of  things  real  and  things  personal,  and 
having  made  the  latter  to  follow  rather  than  control  the  person  in  respect  of 
rights  and  obligations.  J.  Pars.  Partn.  §  103.  The  idea  of  the  firm  being  an 
entity  figured  certainly  also  in  the  civil  law  (see  Code  Nap.  bk.  3,  tit.  9);  and 
It  is  not  surprising  to  find  the  mercantile  view  prevailing  as  tie  legal  one  in  the 
state  of  Louisiana,  where  the  firm  is  called  "a  moral  being,"  and  "a  civil  person 
with  peculiar  rights  and  attributes"  (see  Succession  of  Pilcher,  39  La.  Ann.  362,  1 
South.  929). 


100  CttARAoTEBlSTIC   FEATURES    OF   PART:<EBSHIPS.  (Ch.   3 

sonally  is  liable  only  in  default  of  the  firm's  paying  it.  In  other 
words,  John  Smith  and  Thomas  Brown  are  disposed  to  look  on  them- 
selves in  the  light  of  sureties  for  the  firm  in  the  premises.^  Again, 
if  John  Smith  has  overdrawn  his  share  of  the  profits  of  Smith  & 
Brown,  so  that  the  remaining  profits  will  not  suffice  to  pay  Thomas 
Brown  his  share,  in  commercial  phrase  it  will  be  said  that  Smith 
owes  the  firm,  and  that  the  firm  owes  Brown,  although  such  phrase 
is,  according  to  the  legal  aspect  of  the  question,  altogether  erro- 
neous. *1n  point  of  law,  a  partner  may  be  the  debtor  or  creditor 
of  his  co-partners,  but  he  cannot  be  either  debtor  or  creditor  of 
the  firm  of  which  he  is  himself  a  member."  '  These  instances  are 
given  here  to  illustrate  the  two  different  views  taken  of  the  firm; 
the  one  being  the  legal,  and  therefore  the  true,  one,  and  the  other 
the  commercial  or  mercantile  view,  whereby  the  firm  appears  in 
an  impersonal  light,  very  much  like  a  corporation,  except  for  the 
manner  of  its  coming  into  being.  The  subject  is  susceptible  of 
being  understood  only  by  attributing  at  least  two  aspects  to  part- 
nership, whether  we  attribute  to  it  two  characters  or  not,  partic- 
ularly since  the  authorities  all  recognize  the  twofold  aspect  as  ex- 
isting, while  only  some  of  them  insist  on  there  being  the  two  actual, 
separate,  and  distinct  characters.  It  is  needless  to  here  enter  upon 
a  controversy  where  so  little  substance  appears  in  prospect  of  be- 
ing gained,  whether  it  is  found  that  partnership  is  a  relation  only, 
or  also  an  entity, — a  thing  distinct  from  its  component  members.* 

a  Lindl.  Partn.  p.  111. 

«  Lindl.  Partn.  111.  See  Lord  Cottenham's  judgment  in  Richardson  v.  Bank, 
4  Mylne  &  C.  171,  172,  and  De  Tastet  v.  Shaw,  1  Barn.  &  Aid.  6G4. 

*  "A  partnership  or  joint-stock  company  is  just  as  distinct  and  palpable  an 
entity,  in  the  idea  of  the  law,  as  distinguished  from  the  individual  composing  it, 
as  is  a  corporation,  and  can  contract  as  an  individualized  and  unified  party, 
with  an  individual  person  who  is  a  member  thereof,  as  effectually  as  a  corpora- 
tion can  contract  with  one  of  its  stockholders.  The  only  practical  difference  is 
a  technical  one,  having  reference  to  the  forum  and  form  of  remedy."  Walker 
V.  Wait,  50  Vt.  668.  "The  partnership,  for  most  legal  purposes,  is  a  distinct 
entity,  having  its  own  property,  capable  of  contracting  separate  debts,  having 
the  right  to  sue  in  equity  its  several  members,  and  to  be  protected  against  their 
conduct  to  the  same  extent  that  it  might  be  against  the  conduct  of  strangers." 
Robertson  v.  Corsett,  39  Mich.  777.  "When  one  joins  a  partnership,  he  makes 
himself  a  part  of  an  entity  already  existing,  which  has  acquired  certain  property 
and  business,  and,  in  acquiring  it,  has  incurred  certain  indebtedness.  The  firm 
owns  the  property,  holds  the  business,  and  owes  the  debts."    Cross  v.  Bank,  17  Kan. 


§§    34-35)  PARTNERSHIP    AS    AN    ENTITY.  10 i 

How  Far  the  Law  Regards  a  Partnership  as  an  Entity, 

By  statute,  in  many  of  the  states,  recognition  lias  been  so  far 
given  to  the  commercial  idea  of  partnership  that  actions  may  be 
brought  against  partnerships  in  the  firm  name;  the  judgment  be- 
ing, however,  enforceable  only  against  the  common  property  of 
the  partners,  and  the  private  property  of  only  the  partner  actually 
served  with  process."  In  England,  too,  the  rules  of  the  supreme  court 
permit  the  institution  of  actions  both  by  and  against  partners,  ac- 
tual members  of  the  firm  at  the  time,  in  the  firm  name,*  and  in  a 
few  other  cases  such  recognition  is  intimated^  But  these  instan- 
ces mark  nothing  more  than  an  occasional  and  rare  tolerance  of  the 

336,  per  Brewer,  J.  "The  firm  is  the  contracting  party,  not  the  individuals  com- 
posing the  firm.  The  credit  is  given  to  the  firm.  The  partnership,  the  ideal 
person,  formed  by  the  union  of  interest,  is  the  legal  debtor.  A  partnership  is 
considered  in  law  as  an  artificial  person  or  being,  distinct  from  the  individuals 
composing  it."  Curtis  v.  Hollingshead,  14  N.  J.  Law,  403.  Where  some  of  the 
members  of  one  firm  were  also  members  of  another  firm,  and  both  firms  assigned 
for  the  benefit  of  their  creditors,  a  claim  by  one  firm  against  the  other  might  be 
proved  against  the  debtor  firm,  since  the  two  firms,  notwithstanding  the  interest 
of  said  partners  in  both,  were  separate  entities  as  to  their  respective  creditors.  lu 
re  Haines  &  Co.'s  Estate  (Pa.  Sup.)  35  Atl.  237;  Appeal  of  Grove,  Id.  See, 
also,  Faulkner  v.  Hyman,  142  Mass.  53,  6  N.  E.  S46;  Fitzgerald  v.  Grimmell, 
64  Iowa,  261,  20  N.  W.  179;  Bracken  t.  Dillon,  64  Ga.  243;  Meily  v.  Wood, 
71  Pa.  St.  488.  "In  most  other  cases  where  the  partnership  is  spoken  of  as  a 
separate  legal  entity,  having  its  own  property,  creditors,  and  the  like,  little  more 
is  meant  by  the  legal  proposition  than  that  the  partners,  as  such,  have  special 
rights  and  liabilities,  which  are  worked  out  through  their  partnership  relation." 
Mechem,  Partn.  §  4,  citing  Meehan  v.  Valentine,  145  U.  S.  611,  12  Sup.  Ct.  972; 
Bank  of  Buffalo  v.  Thompson,  121  N.  Y.  280,  24  N.  E.  473.  On  a  note  executed 
by  a  firm  and  an  individual  jointly,  as  between  themselves,  each  is  liable  for  one- 
half  the  debt,  i.  e.  the  firm  is  treated  as  one  person.  See  Hosmer  v.  Burke,  26 
Iowa,  353;  Chaffee  v.  Jones,  19  Pick.  (Mass.)  260;  Warner  v.  Smith,  1  De  Gex. 
J.  &  S.  337. 

5  See  post,  p.  392;    Pom.  Code  Rem.  §  121. 

8  Pol.  Partn.  art.  11,  p.  19;    Id.  art.  63,  p.  118. 

T  See  cases  cited  supra,  note  4.  "The  tendency  of  legislation  and  the  decision 
is  in  the  direction  of  recognizing  the  character  of  a  firm  as  an  entity.  Statutes 
permit  co-partnerships  to  sue  and  be  sued  by  the  firm  name.  Property  of  the  co- 
partnership is  assessed  as  that  of  the  firm,  instead  of  as  that  of  the  individual 
members.  Decisions  permit  chattel  mortgages  executed  by  a  partnership  to  be 
filed  at  the  place  of  its  principal  business."  Paige,  Cas.  Partn.  p.  Ill,  note, 
dting  Minn.  St.  1878,  c.  66,  §  42  (Rev.  St.  1894,  §  5177);  Hubbardston  Lumber 
Co.  v.  Covert,  35  Mich.  255. 


102  CHABACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

mercantile  character  given  the  firm;  for  otherwise,  whether  the  case 
involves  property,  or  debts  or  credits,  or  anything  else  pertaining 
to  a  partnership,  the  law  looks  on  the  matter  as  affecting  the  mem- 
bers of  the  partnership, — having  them  in  view  always,  to  the  ex- 
clusion of  the  firm  as  a  thing  of  itself.* 

Efect  of  Changes  m  tJie  Membership  of  a  ParPnership  According  to 
the  Different  Aspects. 
An  evidence  of  the  disposition  of  the  common  law  to  deny  all 
countenance  to  a  firm,  apart  from  its  component  members,  is  the 
fact  that  the  death  of  a  partner,  or  his  retirement  from  the  firm, 
destroys  the  latter's  existence,  and  that  so,  also,  does  the  marriage 
of  a  feme  sole  partner.^  In  case  of  the  happening  of  either  of  these 
events,  the  partners  in  whom  the  business  remains  would,  looking 
at  the  situation  in  the  commercial  aspect,  regard  the  firm  as  con- 
tinuing, having  merely  lost  a  member.  The  introduction  of  a  new 
person  into  the  business  as  a  partner  would  also,  by  law,  effect 
a  termination  of  the  partnership,  while  in  commercial  phrase  it 
would  be  said  that  the  firm  had  merely  increased  its  membership.^" 
The  business  may  be  conducted,  of  course,  still,  by  the  remaining 
members,  in  the  one  case,  and  by  the  partners,  augmented  as  sug- 
gested, in  the  other;  but  in  either  case  it  is  regarded  in  law  as 
another  partnership  entirely,  by  which  the  business  is  conducted 
after  the  change. 

•  Bates,  Partn.  §§  170,  171.  See  Ex  parte  Beauchamp  [1894]  1  Q.  B.  1;  Cham- 
bere  v.  Sloan,  19  Ga.  84;  Dnicker  v.  WellhouBe,  82  Ga.  129,  8  S.  E.  40.  In 
Jones  T.  Blun,  145  N.  Y.  333,  39  N.  E.  954,  it  was  held  that  under  a  statute 
prohibiting  transfers  by  a  corporation  which  has  refused  payment  of  any  note, 
directly  or  indirectly,  to  any  stockholder,  a  transfer  to  a  partnership,  one  member 
only  of  which  is  a  stockholder,  is  invalid.  The  court  said:  "It  has  been  often 
pointed  out  that  a  partnership  cannot  properly  be  regarded  as  a  legal  entity, 
separate  and  distinct  from  the  several  partners  therein.  For  certain  purposes, 
this  fiction  may  be  very  properly  indulged.  In  keeping  partnership  accounts, 
and  in  marshaling  the  assets  of  an  insolvent  or  liquidating  firm,  this  is  constantly 
done.  It  cannot  be  invoked,  however,  to  shield  the  individual  partner,  in  a  case 
like  the  one  at  bar,  from  the  effect  of  a  statute  forbidding  a  preference,  or  to 
enable  him  to  do  as  a  partner  that  which  the  law  prohibits  him  from  doing  as  an 
individual."  In  Harris  v.  Visscher,  57  Ga.  229,  232,  the  court  said:  "Partner- 
ship is  but  a  relation;  it  is  not  a  person;  it  is  not  a  legal  being.  The  real  owners 
of  partnership  property  are  the  partners."    See,  also,  Bates,  Partn.  §  174. 

»  See  post,  p.  396. 

10  Lindl.  Partn.  p.  110. 


§§   34-35)  PARTNERSHIP    AS    AN    ENTITY,  103 

A  change  in  the  name  of  the  firm  has  no  such  legal  effect,  if  the 
membership  is  not  in  any  wise  altered;  but  any  change  in  the 
membership  puts  an  end  to  the  legal  existence  of  the  firm,  and  all 
expressions  tending  to  a  contrary  understanding  ai'e  mere  figures 
of  speech.  Any  act  by  which  a  firm  is  to  be  either  bound  or  bene- 
fited affects  merely  the  partners  component  of  the  firm  at  the  time 
contemplated  by  the  act.^*  Thus,  a  change  in  the  firm's  member- 
ship discharges  a  guarantor  or  surety  for  the  firm  as  to  any  mat- 
ter occurring  after  the  change,^ ^  unless,  of  course,  such  change 
was  contemplated  by  the  person  to  be  charged. ^^  To  make  the 
obligation  of  such  person  continue,  and,  indeed,  to  bind,  in  any  case, 
third  persons,  after  the  membership  of  the  firm  has  changed,  it  must 
be  shown  that  the  third  persons  acquiesced  in  the  change;  ^*  and 
even  then  it  would  be  more  correct  to  say  that  they  obligated  them- 
selves for  the  successors  of  the  firm  as  well  as  for  the  firm  itself. 
Such  a  liability  would  cease,  also,  upon  the  partnership  changing 
into  a  corporation."  A  legacy  left  to  a  firm  is  payable  to  the 
individuals  composing  the  firm  at  the  time  the  legacy  vests;  ^'  and 
a  legacy  left  to  the  representatives  of  an  old  firm  is  payable  to 
the  executor  of  its  last-surviving  partner,  rather  than  to  the  suc- 
cessors of  the  firm.^^  The  authority  given  to  trustees  to  lend  money 
to  a  particular  firm  fails  upon  the  death  or  retirement  of  any  mem- 

11  Lindl.  Partn.  p.  112.  When  a  firm  is  spoken  of  by  its  name  or  style,  evi- 
dence is  admissible  to  show  who,  in  fact,  constituted  the  firm  at  the  time  in  ques- 
tion. Carruthers  v.  Sheddon,  6  Taunt.  15;  Bass  v.  Olive,  4  Maule  &  S,  18; 
Stubbs  V.  Sargon,  2  Keen,  255,  3  Mylne  &  O.  507. 

12  Bellairs  v.  Ebsworth,  8  Camp.  53;  University  of  Cambridge  v.  Baldwin,  5 
Mees.  &  W.  580;  Simson  v.  Cooke,  1  Bing.  452.  As  to  sureties  to  the  firm,  see 
Holland  v.  Teed,  7  Hare,  50;  Strange  v.  Lee,  3  East,  484;  Weston  v.  Barton, 
4  Taunt.  673;  Simson  v.  Cooke,  1  Bing.  452;  Myers  v.  Edge,  7  Term  R.  254; 
Dry  T.  Davy,  10  Adol.  &  E.  80;  Wright  v.  Russel,  2  W.  Bl.  934.  See,  generally, 
as  to  sureties.  White  Sewing-Mach.  Co.  v.  Hines,  61  Mich.  423,  28  N.  W.  157; 
Equitable  Life  Assur.  Soc.  v.  Coats,  44  Mich.  260,  6  N.  W.  648;  Palmer  t. 
Bagg,  56  N.  Y.  523;  Parham  Sewing-Mach.  Co.  v.  Brock,  113  Mass.  194. 

18  See  Lindl,  Partn.  p.  117;    Pease  t.  Hirst,  10  Barn.  &  O.  122;    Metcalf  T. 
Bruin,  12  East,  400,  2  Camp,  422. 
1*  Backhouse  v.  Hall,  6  Best  &  S.  507. 

16  Liudl.  Partn.  p.  118;   Dance  v.  Girdler,  1  Bos.  &  P.  (N.  R.)  84. 
i«  Stubbs  V.  Sargon,  2  Keen,  255. 
If  Leak  v.  MacDowall,  3  New  Reports,  185. 


104  CHARACTERISTIC   FEATURES    OF   PAKTNERSHIP3.  (Ch.   3 

ber  of  the  firm."  An  authority  to  insure  in  their  names,  given  to 
two  partners,  does  not  authorize  insurance  in  the  names  of  such 
partners  and  another  subsequently  entering  the  firm.^®  An  employ- 
ment of  one  by  a  partnership  under  a  contract  for  a  term  expires 
upon  the  death  or  retirement  of  a  partner,  notwithstanding  that  the 
term  specified  has  not  yet  expired.''"  A  firm,  as  such,  appointed  to 
an  ofiQce,  holds  the  same  only  in  the  persons  of  its  partners  as 
of  the  time  of  the  appointment.^^  Collaterals  left  with  a  banking 
firm  to  secure  advances  prima  facie  do  not  cover  subsequent  ad- 
vances made  after  a  chiange  in  the  firm  membership.^'  In  the  case, 
too,  of  a  deposit  of  collaterals  by  one  partner  to  secure  advances  to 
his  firm,  the  collaterals  cannot  be  held  as  security  for  advances 
made  after  his  death. '*'  It  must  be  remarked,  however,  that,  not- 
withstanding the  inaccuracy  of  the  expressions  in  vogue  with  mer- 
chants in  this  connection,  it  is  difiicult  to  see  how  the  subject  of 
partnership  could  be  discussed  without  using  them.  Hence  they 
will  be  found  employed  in  this  treatise,  and  elsewhere,  in  default 
of  other  expressions  more  in  consonance  with  law.** 

i«  Fowler  v.  Reynal,  2  De  Gex  &  S.  749. 

»»  Barron  v,  Fitzgerald,  6  Bing.  N.  C.  201. 

so  Tasker  v.  Shepherd,  6  Hurl.  &  N.  575;    Burnet  ▼.  Hope,  9  Out.  10. 

21  De  Mazar  v.  Pybus,  4  Ves.  644.  See  Lindl.  Partn.  p.  114;  Barron  ▼.  Fitz- 
gerald, 6  Bing.  N.  C.  201;  Hole  v.  Bradbury,  12  Ch.  Div.  886;  Stevens  v.  Ben- 
ning,  1  Kay  &  J.  168. 

2  2  Lindl.  Partn.  p.  119;    Ex  parte  Kensington,  2  Ves.  &  B.  83,  per  Lord  Eldon. 

28  Bank  of  Scotland  v.  Christie,  8  Clark  &  F.  214. 

2  4  Sir  George  Jessel  in  Pooley  v.  Driver,  5  Ch.  Div.  460.  "Everybody  knows 
that  partnership  is  a  sort  of  agency,  but  a  very  peculiar  one.  You  cannot  grasp 
the  notion  of  agency,  properly  speaking,  unless  you  grasp  the  notion  of  the  ex- 
istence of  the  firm  as  a  separate  entity  from  the  existence  of  the  partners,— a 
notion  which  was  well  grasped  by  the  old  Roman  lawyers,  and  which  was  partly 
understood  in  the  courts  of  equity  before  it  was  part  of  the  whole  law  of  the 
land,  as  it  is  now.  But,  when  you  get  that  idea  clearly,  you  will  see  at  once 
what  sort  of  agency  it  Is.  It  is  the  one  person  acting  on  behalf  of  the  firm."  Id. 
476. 


§    36)  PAitTNEKSHIP    NAME.  105 

PARTNERSHIP  NAME. 

86.  A  partnership  name  is  not  essential,  but  is  convenient. 
The  business  of  a  firm  may  be  carried  on  under 
any  name  -v^hich  the  partners  think  fit  to  adopt, 
except 
EXCEPTION — (a)  A  name  distinctly  purporting  to  be  a 
corporate  name  cannot  be  adopted. 

(b)  Where  a  particular  name  under  -which  a  business  is 

carried  on  by  any  person,  firm,  or  company  has  be- 
come associated  -with  and  appropriated  to  that  busi- 
ness, no  other  person  may  carry  on  a  like  business 
under  the  same  name,  or  a  name  only  colorably 
differing  therefrom,  in  a  manner  calculated  to  de- 
ceive customers  by  leading  them  to  believe  that 
they  are  dealing  -with  such  person,  firm,  or  company 
as  first  mentioned. 

(c)  By  statute,  in   some   states,  the   name  of  one   not  a 

partner  cannot  be  used,  and  the  sufl&x  "and  Com- 
pany" must  represent  an  actual  partner. 

Necessity  of  Firm  Name. 

For  convenience  a  firm  usually  adopts  a  name  by  which  it  shall 
be  known,  and  under  which  it  transacts  its  business.  It  does  not 
always  do  so,  and  it  is  not  essential  that  it  shall. ^^  For  instance, 
where  the  law  has  charged  liability,  and  the  parties  have  claimed 
that  no  partnership  existed,  it  may  readily  be  seen  how  there  would 
be  none.  Such  an  instance  alone  shows  that  it  is  not  incumbent  on 
a  partnership  to  have  a  name.  A  partnership  may  always  act  in 
the  individual  names  of  the  partners.  But  it  may  also  act  in  the 
firm  name.  It  need  not  invariably  pursue  either  course,  but  may 
sometimes  use  its  firm  name,  and  sometimes  the  names  of  its  mem- 
bers.^®    When  any  other  than  the  firm  name  is  used,  all  the  part- 

28  Bates,  Partn.  §  191;  Ontario  Bank  v.  Hennessey,  48  N.  Y.  545;  Meriden 
Nat.  Bank  v.  Gallaudet,  120  N.  Y.  298,  24  N.  E.  994;  Haskins  v.  D'Este,  133 
Mass.  356;  Getchell  v.  Foster,  106  Mass.  42;  Kitner  y.  Whitlock,  88  111.  513; 
Le  Roy  v.  Johnson,  2  Pet.  186. 

««  See  McGregor  v.  Cleveland,  5  Wend.  (N.  Y.)  477;  Berkshire  Woolen  Co. 
T.  Juillard,  75  N.  Y.  535;    Patch  v.  Wheatland,  8  Allen  (Mass.)  102;    Holden  v. 


106  CHARACTERISTIC    FEATURES    OF   PARTNERSHIPS.  (Ch.   3 

ners  must  concur,  because  one  partner  has  no  power  to  bind  the 
firm  in  any  other  than  the  adopted  name.'^ 

Bloxum,  35  Miss.  381;  Ex  parte  Nason,  70  Me.  363;  Ex  parte  First  Nat.  Bank 
of  Portland,  Id.  3G9;  Norton  v.  Seymour,  3  C.  B.  792;  Dudley  v.  Littlefield,  21 
Me.  418;  Mick  v.  Howard,  1  Ind.  250;  McConeghy  v.  Kirk,  68  Pa.  St  200; 
McCauley  v.  Gordon,  64  Ga.  221;  Finch  v.  De  Forest,  16  Conn.  445.  But 
where  the  partners  execute  a  note  in  their  individual  names,  for  a  purpose  foreign 
to  the  partnership  business,  the  note  is  an  individual,  not  a  firm,  debL  Forsyth 
V.  Woods,  11  Wall.  484;  Lill  v.  Egan,  89  111.  609;  Pahlman  v.  Taylor,  75  III. 
629;  Burns  v.  Mason,  11  Mo.  469.  A  signature  by  one  of  a  firm  in  his  name 
"&  Co."  is  good  to  bind  the  other  partners,  though  the  firm  has  been  always 
known  by  the  name  of  another  partner  "&  Co.."  unless  it  be  shown  that  there  is 
such  a  distinct  house  as  that  by  the  style  of  which  the  bill  or  note  is  subscribed. 
Drake  v.  Elwyn,  1  Caines  (N.  Y.)  184.  A  partnership  may  bind  itself  by  its  sig- 
nfiture  to  an  undertaking  in  attachment,  either  by  the  name  of  the  firm  simply,  or 
by  the  signatures  of  the  individual  members  of  the  firm,  provided  it  appears  in  the 
instrument  that  the  intention  is  to  bind  the  partnership.  Grollman  v.  Lipsitz.  43  S. 
C.  329,  21  S.  E.  272.  The  consent  of  one  partner  to  a  firm  contract  is  the  consent 
of  the  firm.  Jurgens  v.  Ittniann,  47  La.  Ann.  367,  16  South.  952.  A  firm  may 
have  several  names,  and,  if  so,  It  Is  bound  by  a  contract  executed  in  either. 
Moffat  v.  McKissick,  8  Baxt.  (Tenn.)  517;  Michael  v.  Workman,  5  W.  Va.  391; 
Munt  V.  Semonin,  70  Ky.  270.  The  description  of  the  defendants  as  partners, 
under  a  particular  name  or  firm,  in  the  writ,  is  not  an  averment  that  they  prom- 
ised by  that  name.  Proof  of  a  promise  by  another  name,  therefore,  is  not  a 
variance.  Brown  v.  Jewett,  18  N.  II.  230.  See,  also,  Miner  v.  Downer,  20  Vt 
461,  466,  where,  in  an  action  against  S.  &  W.  D.  &  Co.,  a  recovery  was  had  upon 
a  note  signed  "D.  &  D."  The  court  said:  "The  present  rule  of  law  is,  we  ap- 
prehend, that  if  one  execute  a  bill,  note,  or  other  writing  by  an  assumed  name, 
or  an  alias  dictus,  he  may,  nevertheless,  be  made  liable  upon  the  note,  or  the 
note  may  be  wholly  disregarded  If  it  be  fatally  defective  (which  we  think  this  la 
not),  and  a  recovery  be  had  upon  a  count  for  the  consideration." 

«T  Palmer  v.  Stephens,  1  Denio  (N.  Y.)  471;  Klrby  v.  Hewitt,  26  Barb.  (N.  Y.) 
607;  Gordon  v.  Bankard,  37  111.  147;  Heenan  v.  Nash,  8  Minn.  407  (Gil.  363); 
Tilford  v.  Ramsey,  37  Mo.  563;  Ostrom  v.  Jacobs,  9  Mete.  (Mass.)  454;  Kirk 
V.  Blurton,  9  Mees.  &  W.  284;  Royal  Canadian  Bank  v.  Wilson,  24  U.  C.  0. 
P.  362.  See  Haskell  v.  Champion,  30  Mo.  136.  "This  is  the  whole  significance 
of  the  firm  name.  It  is  a  name  which  the  partners  adopted,  by  which  each  could, 
in  certain  matters,  bind  the  other  with  himself,  or  another  agent  might  bind 
both."  Haskins  v.  D'Este,  133  Mass.  356,  357.  See,  also,  Wright  v.  Hooker, 
10  N.  Y.  51.  Firm  is  bound  by  acceptance  in  an  agent's  name,  which  it  has 
adopted  as  a  firm  name;  but,  if  it  appears  that  the  agent  was  also  doing  busi- 
ness on  his  own  account,  it  must  be  shown  that  he  accepted  the  bill  on  account 
of  the  partnership,  in  order  to  bind  it.  Bank  of  Rochester  t.  Monteath,  1  Denio 
(N.  Y.)  402.  In  Norton  v.  Seymour,  3  C.  B.  792,  794,  Maule,  J.,  said:  "I  should 
hesitate  to  say  that  one  of  two  partners  could  not  bind  the  other  by  signing  the 


§   36)  PARTNERSHIP   NAME.  107 

What  Name  may  he  Used. 

Generally  speaking,  every  man  is  free  to  call  himself  by  what 
name  he  chooses,  or  by  different  names  for  different  purposes,  so 
long  as  he  does  not  use  this  liberty  as  a  means  of  fraud,  or  of 
interfering  with  substantial  rights  of  his  fellow  citizens.  And  this 
principle  extends  to  commercial  transactions  as  well  as  to  other 
affairs  of  life.'*  "Individuals  may  cari-y  on  business  under  any 
name  and  style  they  may  choose  to  adopt."  "  The  style  of  the  firm 
need  not,  and  often  does  not,  express  the  name  of  any  actual  member 
of  the  firm.  It  may  contain,  and  often  does  contain,  names  other 
than  those  of  the  actual  partner,  and  it  may  express  no  individual 
names  at  all.^"     On  the  other  hand,  although  no  man  is  to  be  pre- 

true  names  of  both,  instead  of  the  fictitious  name."  This  seeuis  to  be  the  law 
where  the  firm  has  received  the  benefit  of  the  consideration,  or  where  the  firm 
has  no  name.  Bates,  Partn.  §  200;  McCJrcgor  v.  Cleveland,  5  Wend.  (N.  Y.) 
475;  Getchell  v.  Foster,  106  Mass.  42;  Patch  v.  Wheatland,  8  Allen  (Mass.) 
102;  Kitner  v.  Whitiock.  88  111.  513;  Crozii-r  v.  Kirker.  4  Tex.  252;  Richardson 
V.  Huggins,  23  N.  H.  106;  Crouch  ..  Bowman.  3  Humph.  (Tenn.)  200;  Iddings 
V.  Pierson,  100  Ind.  418.  Where  there  is  no  firm  name,  the  names  of  all  the 
partners  need  not  be  used  to  bind  the  firm.  Bates,  Partn.  §  201.  The  firm  is 
bound,  though  a  partner  uses  his  own  name  alone.  Sage  v.  Sherman,  2  N.  Y.  417 
(but  see  Uhler  v.  Browning,  28  N.  J.  Law,  79;  Dreyer  v.  Sander,  48  Mo.  400; 
Clark  V.  Houghton,  12  Gray  [Mass.]  38);  or  his  own  name  with  the  suffix  *'& 
Co.,"  Drake  v.  Elwyn,  1  Caines,  184;  Brown  v.  Pickard,  4  Utah,  292,  9  Pac. 
.'.73.  and  11  Pac.  512;  Austin  v.  Williams,  2  Ohio.  61;  Crary  v.  Williams,  Id. 
65;  or  a  fictitious  name,  Holland  v.  Long,  57  Ga.  36.  As  to  immaterial  variation 
from  true  name,  see  Bates,  Partn.  S  202. 

2»  "A  partnership  can  exist  without  a  firm  name  even  when  there  are  articles; 
but  the  great  convenience  makes  a  name  almost  a  necessity,  and,  in  the  absence 
of  statute  provisions,  there  seems  to  be  absolutely  no  restriction  in  the  choice 
or  change  of  a  name,  which  may  be  the  Individual  name  of  one  or  more  membe»8, 
or  of  all,  or  a  mere  creation  of  the  fancy;  and  there  may  be  several  names, 
or  two  firms  may  constitute  a  new  firm,  without  adopting  a  new  name;  or, 
again,  two  firms  composed  in  part  of  the  same  persons  may  adopt  the  same  name." 
Lindl.  Partn.  (Wentw.  Ed.)  p.  112,  note  1.  citing,  inter  alia.  Wright  v.  Hooker, 
10  N.  Y.  51;  Ontario  Bank  v.  Hennessey.  48  N.  Y.  545;  Crocker  v.  Colwell.  46 
N.  Y.  212;  Mershon  v.  Hobensack,  22  N.  J.  Law,  372;  Kitner  v.  Whitiock,  88 
111.  514;  Ottoman  Cahvey  Co.  v.  Dane,  95  111.  203;  Llll  v.  Egan.  89  111.  609; 
Haskins  v.  D'Este.  133  Mass.  35G;  U.  S.  Bank  v.  Binney,  5  Mason,  176,  Fed. 
Cas.  No.  16.791.    And  see,  generally,  cases  cited  supra. 

20  Maugham  v.  Sharpe,  17  C.  B.  (N.  S.),  at  page  402. 

•0  One  person,  or  an  association  of  persons,  may  do  business  under  a  firm  name 
entirely  distinct  from  the  name  or  names  of  the  person  or  persons  composing 
the  firm.    Shain  v,  Du  Jardin  (Cal.)  38  Pac.  529. 


108  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

v^ented  from  carrying  on  any  lawful  business  in  his  own  name  by  the 
mere  fact  of  his  name  and  business  being  like  another's,^ ^  yet  the 
mere  fact  of  the  name  itself  being  his  own  does  not  give  him  any 
right  or  license  to  use  it  with  such  additions,  and  in  such  a  connec- 
tion, as  to  deceive  outside  persons,  and  make  them  believe  they  are 
dealing  with  some  one  else.^^ 

It  is  provided  by  statute  in  some  of  the  United  States  that  no 
person  shall  do  business  in  the  name  of  one  not  a  partner,^'  and 
that  the  designation  "and  Company,"  or  "&  Co.,"  shall  represent  an 
actual  partner  or  partners.^*  These  statutes  are  penal,  and  their 
purpose  is  to  prevent  fraud;  a  person  being  forbidden  to  induce  a 
false  credit  on  the  strength  of  an  unauthorized  name."  They  can- 
not be  invoked  by  a  debtor,  however,  to  avoid  the  payment  of  a  debt 
to  a  creditor  offending  against  them.'*  One  effect  of  these  statutes 
is  to  preclude,  where  they  are  in  force,  the  use  of  an  old,  estab- 
lished firm  name  by  a  sucec«ssor  only  in  respect  of  interest  in  the 
old  firm,  who  carries  on  business  in  the  same  line;  their  effect 
being  to  make  a  rule  contrary  to  that  prevailing  in  England  and 
most  of  the  United  States,  where  the  firm  name  has  been  held  to 
be  an  asset  of  the  business,  and  even  to  pass  by  a  sale  of  the  good 
will."     For  a  trade  name   which   has  become  well   known   in  a 

81  Burgess  v.  Burgess,  3  De  Gex,  M.  &  G.  89(5.  See  Williams  v,  Farrand, 
88  Mich.  473,  50  N.  W.  44G;  Meneely  v.  Meneely,  62  N.  Y.  427;  Russia  Cement 
Co.  V.  Le  Page,  147  Mass.  206,  17  N.  E.  304. 

3  2  Pol.  Partn.  art.  11;  Holloway  v.  HolJoway,  13  Beav.  209;  Bininger  y.  Clark, 
60  Barb.  (N.  Y.)  113. 

33  Louisiana:  Voorbies'  Rev.  Laws  1884,  §  2668.  Georgia:  Code  1882,  § 
1897.  In  New  York  the  above  rule  does  not  apply  to  partnerships  located  or 
doing  business  in  other  countries.  Laws  1849,  c.  347;  3  Rev.  St.  (9th  Ed.)  p. 
2137;    Stim.  Am.  St.  Law,  §  5305. 

34  Louisiana:     Voorbies'  Rev.  Laws  1884,  §  2668;    Stim.  Am.  St.  Law,  §  5305. 
SB  Wood  v.  Railway  Co.,  72  N.  Y.  198;    Zimmerman  v.  Erbard,  83  N.  Y.  76; 

Kent  V.  Mojonier,  36  La.  Ann.  259. 

36  Wood  V.  Railway  Co.,  supra;  Wolfe  v.  Joubert,  45  La.  Ann.  1100,  13  South. 
806;  Kent  v.  Mojonier,  36  La.  Ann,  259;  Adams  v.  Adams,  7  Abb.  N.  C.  (N.  Y.) 
292;  Thompson  v.  Gray,  11  Daly  (N.  Y.)  183.  Pen.  Code,  §  363,  declaring  guilty 
of  a  misdemeanor  one  who  transacts  business,  using  the  designation  "&  Com- 
pany," when  be  has  no  partner,  does  not  preclude  one  so  carrying  on  business 
under  such  a  firm  name  from  recovering  the  amount  of  a  credit  which  he  gives 
in  connection  with  the  business.  Kennedy  v.  Budd,  5  App.  Div.  140,  39  N.  Y. 
Supp.  81. 

•  7  Levy  Y.  Walker,  10  Ch.  DiT.  436;  Frazer  v.  Lubricator  Co.,  121  111.  147,  13 


§   36)  PARTNERSHIP    NAME.  109 

locality  for  many  years  as  identified  with  a  particular  business  at- 
ti'acts  a  confidence  which  a  name  newly  adopted  has  yet  to  earn. 
There  are  few  persons  who  cannot  recall  trade  designations  that 
have  descended  from  one  generation  to  another,  and,  in  cases  of 
successions  to  a  business,  sometimes  all  the  persons  trading  bear 
names  not  occurring  in  the  designation  at  all. 

In  the  selection  of  a  name  to  designate  a  partnership,  it  is  well 
to  avoid  one  importing  a  corporation.  In  some  of  the  United  States 
the  selection  of  such  a  name  is  prohibited  by  statute,  the  prohibi- 
tion being  enforced  by  fine.'^  According  to  Pollock,  such  a  se- 
lection would  probably  be  unlawful,  also,  in  England,  although 
he  seems  uncertain  as  to  the  method  that  would  be  employed  there 
to  prevent  it.^^  He  suggests  that  the  word  "Company,"  inasmuch 
as  it  is,  by  common  usage,  applicable  to  unincorporated  associations 
as  well  as  corporations,  would  not,  perhaps,  be  covered  by  such  a 
restriction.*" 

The  name  should  not  include  that  of  any  but  general  partners, 
but  the  effect  of  indifference  to  this  rule  would  be  merely  to  ren- 
der the  special  partner  whose  name  appears  liable  for  firm  debts 
as  if  he  was  a  general  partner.  This  would  not  be  the  result,  un- 
der the  laws  of  some  of  the  states,  if  the  word  "Limited"  followed 

N.  E.  639.  Further,  as  to  the  construction  and  effect  of 'this  class  of  statutes, 
see  Gay  v.  Seibold,  97  N.  Y.  472;  Sparrow  v.  Kohn,  109  Pa,  St.  359,  2  Atl.  498. 
lu  Mississippi,  if  a  partnership  business  is  conducted  in  the  name  of  one  partner, 
without  tlie  addition  of  the  words  "&  Co.,"  the  partnership  property  is  treated  a.«" 
his  individual  property,  so  far  as  his  individual  creditors  are  concerned.  Gumbe) 
V.  Koon,  59  Miss.  264.  See  Stim.  Am.  St.  Law,  §  5305,  for  statutory  provi- 
sions regulating  use  of  firm  name.  "&  Co."  creates  a  prima  facie  presumption  of 
an  unnamed  partner.  Whitlock  v.  McKechnie,  1  Bosw.  (N.  Y.)  427.  Contra,  in 
the  absence  of  such  a  statute,  Robinson  v.  Magarity,  28  111.  423;  Brennan  v. 
Pardridge,  67  Mich.  449,  35  N.  W.  85.  And  see  Fulton  v.  Maccracken,  18  Md. 
528,  544. 

8  8  Illinois:  1  Starr  &  C.  Ann.  St.  1896,  p.  1332,  c.  38,  §  220;  Hazel  ton  Boiler 
Co.  V  Hazelton  Tripod  Boiler  Co.,  142  111.  494,  30  N.  E.  339.  Where  persons 
associate  themselves  together  and  carry  on  business  under  a  common  name,  and 
the  association  is  not  a  cori)oration,  they  may  be  regarded  as  partners,  whatever 
name  they  have  adopted.  Carico  v.  Moore,  4  Ind.  App.  20,  29  N.  E.  928.  The 
business  of  a  partnership  may  be  carried  on  under  any  name  which  the  partners 
adopt,  though  it  be  one  in  form  appropriate  for  a  corporation.  Holbrook  t.  In- 
surance Co.,  25  Minn.  229;  Crawftwd  y.  Collins,  45  Barb.  (N.  Y.)  269. 

88  Pol.  Partn.  art.  11.  *•  Id. 


110  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

the  proper  name  or  names  in  the  firm  designation  used  in  the  trans- 
action of  the  firm's  business.** 

Exclusive  Right  to  Name. 

A  partnership  name  once  adopted  is,  after  the  firm  has  become 
identified  with  it,  jealously  guarded  by  the  firm  against  the  aggres- 
sions of  other  persons  or  firms  in  the  same  line  of  business  who 
might  seek  to  assume  and  maintain  the  use  of  the  same  name,  or 
a  similar  one.  This  is  no  question  peculiar  to  partnership,  however, 
for  the  right  of  defense  against  such  aggressions  pertains  to  indi- 
viduals as  well.  To  say  that  a  man  or  a  firm  has  a  property  in 
a  name  would  not,  in  all  cases,  be  correct,  although  sometimes,  as 
against  certain  individuals,  there  might  be  such  a  property,  the 
reference  here  being  particularly  to  the  case  of  the  sale  of  the 
good  will  of  a  business,  which  sale  would  carry  the  seller's  right 
to  the  use  of  the  trade  name;  and  the  use  of  the  name  thereafter 
would  be  assured  to  the  purchaser  as  against  the  seller.  There  is 
a  property  in  a  trade  mark,  by  which  a  firm  or  person  designates  or 
symbolizes  some  proprietory  article  manufactured  and  kept  for  sale, 
but  there  is  not  such  a  general  property  in  a  name  under  which 
business  is  carried  on  in  the  usual  course.**  In  Levy  v.  Walker  *' 
the  court  asked,  'Is  there  any  authority  showing  that  a  man  has 
such  a  property  in  his  name  that  he  can  prevent  another  person 
from  using  it,  when  the  principle  of  trade  mark  does  not  come  in?" 
And,  answering  his  own  question,  the  court  added,  "A  man  can 
assume  what  name  he  pleases."  The  security  of  a  firm  in  the  pos- 
session of  the  name  it  has  adopted  lies  altogether  in  its  right  to 
seek  the  intervention  of  equity  to  prevent  fraud.  This  security  does 
not  depend  upon  any  exclusive  right  which  the  firm  may  be  supposed 
to  have  to  a  particular  name,  or  to  a  particular  form  of  words.  The 
right  is  to  be  protected  against  fraud;  and  fraud  may  be  practiced 
by  means  of  a  name,  though  the  person  practicing  it  may  have  a 
perfect  right  to  use  that  name,  provided  he  does  not  use  it  under 
circumstances  such  as  to  effect  a  fraud  upon  others.**  And  it  seems 
that  the  law  will  thus  protect  against,  not  actual  fraud  only  (that  is, 
fraud  intentionally  committed),  but  against  constructive  fraud  as 
well ;  that  is,  it  will  prevent  a  man  from  so  carrying  on  business  as, 

*i  See  post,  p.  445.  *2  Lindl.  Partn.  p.  114.         *3  IQ  Ch.  Div.  436,  445. 

*♦  Croft  V.  Day,  7  Beav.  84;  I'razer  v.  Lubricator  Co.,  121  111.  147,  13  N.  E.  639. 


§   36)  PARTNERSHIP    NAME.  Ill 

knowingly  or  not,  to  let  it  appear  that  his  business  is  the  business 
of  another  man.  "And  it  might  happen  that  the  mere  use  of  a  well- 
known  fancy  name  would  be  evidence  of  an  intention  on  the  part 
of  the  person  using  it  to  commit  a  fraud."  *' 

Same —  Corporation  Infringing  Trade  Name — Remedy, 

The  person  or  firm  aggrieved  by  the  fraudulent  use  of  a  name 
can  seek  redress  against  offending  corporations  as  well  as  against 
offending  individuals  or  firms.*'  Doubt  once  existed  as  to  wheth- 
er, in  such  a  case,  the  remedy  would  lie  against  the  corporation, 
rather  than  the  persons  who  procured  it  to  assume  the  name,  the 
ground  of  the  doubt  being  that  the  corporation  has  power  to  trade 
only  under  the  name  by  which  it  came  into  existence.*^  The  answer 
to  this  is,  however,  that  there  is  no  obligation  upon  the  corporation 
to  trade  at  all,  and  the  aggrieved  party  must  not  be  required  to 
suffer  merely  because  it  would  embarrass  the  offender  if  relief  were 
given.** 

Same — No  Trade  Name  without  Actual  Business. 

It  is  perhaps  unnecessary  to  say  that  no  one  will  be  secure  in  the 
possession  of  a  trade  name  unless  appropriated  In  connection  with 
an  actual,  existing  business.*^  In  other  words,  no  one  may  effect- 
ively appropriate  a  trade  name  in  the  vague  anticipation  of  doing 
business  under  it  sometime  in  the  future. 

What  may  he  Done  in  Firm  Name. 

When  a  partnership  has  adopted  a  firm  name,  all  its  business 
should  be  transacted  in  such  name.  Indeed,  as  will  be  seen,  a  part- 
ner ordinarily  has  no  power  to  bind  the  firm  by  contracts  made  in 
any  other  name.°°  Whatever  is  done  by  the  members  of  a  part- 
nership under  their  firm  name  is,  with  an  exception  presently  to  be 
noted,  as  valid  as  if  done  in  the  real  names  of  the  partners.'*    The 

*6  Merchant  Banking  Co.  of  London  v.  Merchants'  Joint  Stock  Bank,  9  Ch. 
DiT.  560,  563. 

*8  Pol.  Partn.  art.  11,  p.  18. 

*T  Lawson  v.  Bank.  IS  C.  B.  84,  25  Law  J.  C.  P.  188. 

*8  Pol.  Partn.  art  11,  p.  18. 

*9  Lawson  v.  Bank,  supra;  Pol.  Partn.  art.  11,  p.  18. 

'0  See  ante,  note  27. 

"1  Hendren  t.  Wing,  60  Ark.  561,  31  S.  W.  149.  Personal  property  may  be 
mortgaged,  as  well  as  sold,  to  a  partnership,  in  the  firm  name,  without  the  use 
of  the  name  of  any  of  the  partners.     Hendren  v.  Wing,  60  A.rk.  561,  31  S.  W.  149. 


112  CHARACTERISTIC   FEATURES    OP   PARTNERSHIPS.  (Ch.   3 

firm  name  is  merely  a  conTenient  abbreviation  or  symbol  of  the  in- 
dividual names."  The  use  of  a  firm  name,  however,  raises  a  prima 
facie  presumption  that  a  partnership  exists,"  and  that  the  act  ia 
a  partnership  transaction."** 

Conveyances  of  real  property  cannot  be  made  by  or  to  a  partner- 
ship in  the  firm  name,  but  must  be  made  in  the  individual  names 
of  the  partners.  A  conveyance  in  the  firm  name,  however,  will  pass 
an  equitable  title;  and,  if  the  real  names  of  one  or  more  of  the  part- 
ners appear  in  the  firm  name,  a  conveyance  to  the  firm  in  the  name 
of  the  firm  will  vest  the  le^al  title  in  the  partners  whose  names 
appear,  and  they  will  hold  it  in  trust  for  all  the  partners." 

In  the  absence  of  statute,  actions  cannot  be  maintained  by  or 
against  a  partnership  in  the  firm  name."* 

n  Bates,  Partn.  §  19L 

63  Whitlock  V.  McKechnie,  1  Bosw.  (N.  Y.)  427;  Bishop  v.  nail.  9  Gray  (Mass.) 
430.  But  see  Robinson  y.  Magarity,  28  111.  423;  Chinic  v.  Gervais,  2  Low.  Can. 
Rev.  de  Leg.  334,  K.  B. 

64  Haskins  v.  D'Este,  133  Mass.  356;  Baring  v.  Crafts,  9  Mete.  (Mass.)  380; 
Ferris  v.  Thaw,  5  Mo.  App.  279. 

66  Menage  v.  Burke,  43  Minn.  211,  45  N.  W.  155;  Townshend  v.  Goodfellow,  40 
Minn.  312,  41  N.  W.  1056;  Winter  v.  Stock,  29  Cal.  408;  Moreau  v.  SaEEarans,  3 
Sneed  (Tenn.)  595.  "The  legal  title  to  real  estate  can  be  held  only  by  a  person 
or  a  corporate  entity  which  is  deemed  such  in  law;  and  therefore  a  partnership 
cannot,  as  such,  take  and  hold  such  legal  title."  Gille  v.  Hunt,  35  Minn.  357,  29 
N.  W.  2.  In  Tidd  v.  Rines,  26  Minn.  201,  2  N.  W.  497,  it  was  decided  that  a 
conveyance  to  a  partnership  by  its  firm  name  did  not  vest  in  it  any  legal  title  or 
estate,  because  a  partnership,  as  such,  is  not  recognized  in  law  as  a  person,  so 
that,  even  had  it  been  stated  in  the  mortgage  that  the  name  inserted  as  the  mort 
gagee  was  that  of  a  partnership,  it  would  not  have  made  the  partnership  a  mort 
ga^ee.  Nor  would  the  individual  partners  other  than  the  one  named  be  the  mort- 
gagee. "Where  the  style  of  a  partnership  is  inserted  as  grantee,  and  it  contains 
the  name  or  names  of  one  or  more  of  the  partners,  there  is  no  reason  why  the 
title  should  not  vest  in  the  partners  so  named,  and  the  authorities  are  to  the  ef- 
fect that  it  would."  Gille  v.  Hunt,  35  Minn.  357,  29  N.  W.  2.  See,  also,  Morri- 
son V.  Mendenhall,  18  Minn.  232  (Gil.  212);  Reeu  t.  Railroad  Co.,  105  Mass.  303i 
Lippincott  v.  Carriage  Co.,  25  Fed.  577. 
»«  S*e  post,  p.  392. 


§    89)  PAUTNERSHIP    CAPITAL.  113 

PARTNERSHIP  PROPERTY. 

37.  Partnership   property,   in   its   largest  sense,  embraces 

everytMng  that  the  iirni  owns,  consisting  of  both 

(a)  The  capital  contributed  by  its  members,  and 

(b)  The  property  subsequently  acquired  in  partnership 

transactions. 

38.  The  term  "partnership  property"  is   sometimes  used, 

in   a   narrower   sense,  to   designate  what  the   firm 
owns,  other  than  its  capital. 

During  the  continuance  of  a  firm,  the  capital  contributed  by  its 
members  is  not  distinguishable  from  other  property  acquired  in 
partnership  trnnsactions.  All  alike  constitutes  partnership  prop- 
erty or  assets,  and  is  treated  alike  in  the  administration  of  the  part- 
nership affairs.  Third  persons  are  not  concerned  with  the  origin 
of  the  fiiTu's  title.  In  treating  of  the  general  characteristics,  there- 
fore, of  partnership  property,  it  is  impossible  to  distinguish  between 
the  capital  and  the  other  property  of  the  partnership.  As  between 
themselves,  however,  under  the  partnership  agreement,  the  partners 
have  certain  rights,  and  are  under  certain  liabilities,  with  respect 
to  the  partnership  capital.  It  will  be  convenient  to  first  disc-iiss 
these  rights  and  liabilities  separately,  and  then  to  take  up  the  sub- 
ject of  partnership  property  in  general 

PARTNERSHIP  CAPITAL. 

39.  The  capital   of  a   partnership  is  the  aggregate   of  the 

sums   contributed   by  its   members  to   establish   or 
continue  the  partnership  business.'^ 

The  "capital"  is,  under  ihe  agreement  of  partnership,  invariable; 
and  in  this  respect  the  foice  of  the  expression  differs  widely  from 

»T  See  Dean  v.  Dean,  54  Wis.  23,  11  N.  W.  239;  Cf.  Thomaa  v.  Lines.  83  N. 
O.  191.  See,  also,  Sexton  v.  Lamb,  27  Kan.  426;  Nutting  ▼.  Ashcroft,  101 
Mass.  300;  Mather's  Ex'r  v.  Patterson,  33  Pa.  St.  485.  Where  a  former  clerk  is 
taken  into  co-partnership  by  a  firm  which  was  indebted  to  him,  and  the  amount 
of  such  indebtedness  is  placed  to  his  credit  upon  the  new  books,  to  which,  on  dis- 
■olution  of  the  firm,  is  added  his  share  of  the  net  profits,  such  indebtedness  will 
GEO.PART.— 8 


114  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch     3 

that  of  the  other  expression,  "the  firm's  property  or  assets";  for  the 
latter  fluctuates  according  to  the  fortunes  of  the  business."  The 
capital  is  in  some  cases  (notably,  in  the  cases  of  professional  and 
mechanical  partnerships)  a  matter  of  nominal  contribution  merely, 
unless  we  choose  to  say,  rather,  that  in  some  cases  the  capital  is 
in  profits,  which  is  a  confusing  expression. 

SAME— CONTRIBUTIONS  OTHER  THAN  IN  MONEY. 

40.  A  partner's  contribution  to  the  firm's  capital  need  not 
be  in  money,  but  may  consist  of  anything  else  of 
value. 

It  is  not  necessary,  in  order  to  have  the  contribution  to  a  firm's 
capital  perfectly  valid,  that  such  contribution  shall  be  in  money 
in  all  cases;  for,  by  agreement,  the  contribution,  although  stated  in 
terms  of  money,  may  be  (except  in  the  case  of  a  special  partner's 
contribution)  in  the  form  of  securities,  a  patent,  the  good  will  of  a 
business,  or  anything  else  which  is  apparently  readily  convertible 
into  money."*  It  must  come  into  the  fund,  however,  free  from  liens 
and  incumbrances  generally,  to  the  extent  of  the  contribution;  and 
any  expenditure  upon  the  property  necessary,  in  order  to  make  the 
amount  agreed  to  be  contributed  good,  is  chargeable  to  the  partner 
contributing  the  property.'* 

SAME— PARTNERS'  RIGHTS  AS  TO  CAPITAL. 

41.  The  capital  belongs  to  the  partners  collectively,  or  as 
a  firm;  but  upon  dissolution  it  resolves  itself  again 
into  individual  property,  in  the  original  several  pro- 
portions. 

aot  be  regarded  as  capital  put  in  by  such  new  member,  but  rather  as  a  loan  to 
the  firm,  to  be  repaid  him  with  his  share  of  the  profits.  Topi«ng  v.  Paddocli,  92 
111.  92.  See,  also,  Stafford  v.  Fargo,  35  111.  481.  A  premium  paid  for  admission 
to  another's  business  is  the  latter's  individual  property,  and  not  a  contribution  to 
capital.    Evans  v,  Hanson,  42  111.  234;  Ball  v.  Farley,  81  Ala.  288,  1  South.  253. 

5  8  Lindl.  Partn.  p.  320. 
69  Bates,   Partn.  §  253. 

6  0  Bates,   Partn.   §   254;   Dunuell   v.    Henderson,  23   N.   J.   Eq.   174.     See,  also, 
Sexton  v.  Lamb,  27  Kan.  426;  Nichol  v.  Stewart,  3G  Ark.  612. 


§§  41-42)  partners'  rights  as  to  capital.  115 

42.  In  the  absence  of  anything  sho^wing  a  contrary  inten- 
tion, the  rights  of  all  the  partners  in  the  capital  are 
presumed  to  be  equal. 

The  capital  being  once  made  up  of  these  contributions,  whether 
of  monej  or  anything  other  than  money,  it  cannot  be  said,  technic- 
ally, that  any  individual  partner  is  the  owner  of  any  part  of  it;  and 
this  fact  involves  one  of  the  phases  of  partnership  where  it  is  most 
convenient  to  assume  the  existence  of  a  distinction  between  the  firm, 
as  an  entity,  and  the  partners  who  compose  it.  The  capital  belongs 
to  the  firm.^^  Upon  the  dissolution  of  the  firm  and  the  payment  of 
its  debts,  the  capital  resolves  itself  back  into  individual  property, 
in  the  original  several  proportions;'^  but  during  the  firm's  exist- 
ence the  individual  partner's  right  to  any  part  of  it  exists  only  in 
respect  of  the  fact  that  he  is  one  of  those  who  compose  the  partner- 
ship that  owns  it. 

Presumption  of  Equality —  Cont'rihxLtion  of  Services, 

In  the  absence  of  anything  showing  a  contrary  intention,  the 
rights  of  all  the  partners  in  the  capital  are  presumed  to  be  equal. 
But  this  presumption  may  be  rebutted.®^  It  only  applies  where  a 
partnership  is  merely  proved  to  exist,  and  there  is  nothing  to  show 
what  are  the  shares  of  the  respective  parties.^*  WTien  the  amount 
of  each  partner's  contribution  is  shown,  there  is  no  room  for  pre- 
sumptions, and  upon  a  dissolution  each  partner  must  be  repaid  the 
amount  contributed  by  him,  before  there  is  any  distribution  of 
profits.®'     In  many  cases  a  partner  contributes  no  money  or  prop- 

81  Lindl.  Partn.  p.  323;  Bates,  Partu.  §  256;  Clark's  Appeal,  72  Pa.  St.  142; 
Grissom  V.  Moore,  106  Ind.  296,  6  N.  E.  629;  Roberts  v.  McCarty,  9  Ind.  16; 
Huston  y.  Neil,  41  Ind.  504;  Hiscock  v.  Phelps,  49  N.  Y.  97;  Person  v.  Wilson, 
25  Minn.  89;  Shea  v.  Donahue,  15  Lea  (Tcnn.)  160.  "But  where,  as  is  usual  in 
an  ordinary  mercantile  partnership,  a  partnership  is  created,  not  merely  in  prof- 
its and  losses,  but  in  the  property  itself,  the  property  is  transferred  from  the  orig- 
inal owners  to  the  partnership,  and  becomes  the  joint  property  of  the  latter." 
Whitcomb  v.  Converse,  119  Mass.  38,  43. 

82  Shea  V.  Donahue,  15  Lea  (Tenn.)  160;  Whitcomb  v.  Converse,  119  Mass.  38. 
See,  also,  post,  p.  415, 

8  8  Jackson  v.  Crapp,  32  Ind.  422,  429. 

84  Id. 

8  5  Livingston  v.  Blanchard,  130  Mass.  341;  Whitcomb  v.  Converse,  119  Mass. 
38;  Shea  v.  Donahue,  15  Lea  (Tenn.)  160;  Taylor  v.  Coffing,  18  111.  422;  Ray 
mond  V.  Putnam,  44  N.  H.  160;    Marquand  v.  Manufacturing  Co.,  17  Johns.  (N. 


116  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

erty,  his  equivalent  being  services,  or  something  else  at  the  time 
altogether  intangible.  In  such  a  case  the  partner  contributing  only 
services  is  not  entitled,  on  dissolution,  to  any  part  of  the  original 
capital.^®  In  other  words,  partners  who  have  contributed  unequal- 
iy  to  the  capital  stock  are.  upon  dissolution,  entitled  to  share  in 
the  capital  stock,  not  equally,  but  in  the  proportion  to  the  amounts 
contributed  by  them  resj^ectively  thereto."^  If  this  were  not  the 
rule,  it  would  be  possible  for  a  partner  who  contributed  little  or 
nothing  to  make  a  large  profit,  at  the  expense  of  his  co-partner,  by 
dimply  dissolving  the  partnership  as  soon  as  it  was  formed,  and  be- 
fore either  profits  or  losses  were  made.  This  would  be  the  result  if 
one  of  the  partners  should  die  immediately  after  the  formation  of 
the  firm.  Such  an  intention  must  be  clearly  shown.  The  contract 
will  not  be  so  construed  unless  its  terms  require  it 

Losses  Itnpalring  Capital. 

Where  the  business  has  resulted  in  a  loss  impairing  the  capital, 
such  loss  is  prima  facie  to  be  equally  borne,  notwithstanding  the 
fact  that  the  capital  was  unequally  contributed.®*  Thus,  in  Whit- 
comb  V.  Converse,**  the  articles  of  pai'tnership  provided  that  A. 
and  B.  should  contribute  the  whole  capital  in  unequal  proportions; 
that  B.,  C,  and  D.  should  contribute  all  their  time  to  the  business, 

y.)  525;  Conroy  v.  Campbell,  45  N.  Y.  Super.  Ct.  32G.  Where,  in  an  action  to 
settle  a  partnership,  the  evidence  merely  shows  that  one  of  the  partners  contributed 
the  capital  and  the  other  the  labor  and  skill,  a  finding  that  the  agreement  in  case 
of  a  dissolution  was  that  the  party  furnishing  the  capital  should  first  be  repaid  the 
amount,  and  only  the  remainder  divided  between  the  partners,  w^ould  be  warranted. 
Washington  v.  Washington  (Tex.  Civ.  App.)  31  S.  W.  88.  Upon  a  dissolution 
and  settlement  of  a  partnership,  the  amounts  advanced  individually  for  the  joint 
business  by  each  partner  should  be  ascertained;  and  a  balance  allowed  the  one 
making  the  greatest  advances  of  the  excess  of  his  advances  over  the  advances 
of  his  co-partner,  which  excess  is  a  lien  on  the  partnership  property;  and  on  a  sale 
by  a  master  of  such  property,  and  the  payment  of  such  excess  to  the  partner  en- 
titled thereto,  the  remainder  should  be  divided  between  the  partners  according  to 
their  respective  interests.    Nims  v.  Nims,  23  Fla.  69,  1  South.  527. 

86  Shea  V.  Donahue,  15  Lea  (Tenn.)  160. 

«T  Jackson  v.  Crapp,  32  Ind.  422. 

68  Bates,  Partn.  §  813;  Moley  v.  Brine,  120  Mass.  324;  Sangston  r.  Hack,  52 
Md.  173,  200;  Jones  v.  Butler,  87  N.  Y.  613;  Hasbrouck  v.  Childs.  3  Bosw.  (N. 
Y.)  105;  Taft  v.  Schwamb,  80  111.  289;  Taylor  v.  CoflSng,  18  111.  422,  428;  Rich 
ards  V.  Grinnell,  63  Iowa,  44,  18  N.  W.  06S;  Carlisle  v.  Tenbrook,  57  Ind.  529. 

6  9  119  Mass.  38. 


§   43)  ADVANCES    BY    PARTNER. 


117 


and  A.  "such  time  as  he  may  be  able  to  give";  and  that  each  should 
receive  one-fourth  of  the  net  profits.  The  business  resulted  in  a  loss 
of  a  portion  of  the  capital.  It  was  held  that  the  capital  constituted 
a  debt  of  the  partnership,  to  which  all  the  partners  were  bound  to 
contribute  equally.  The  fact  that  the  partner  contributing  services 
loses  them  does  not  affect  the  question.'^''  The  doctrine  here  pre- 
sented is  sustained  by  the  great  weight  of  authority,  though  there 
are  some  contra  cases.^^  Of  course,  the  agreement  of  the  parties 
determines  the  proportions  in  which  losses  are  to  be  shared,  and 
what  losses  are  to  be  shared.  But,  prima  facie,  a  loss  of  capital  is 
like  any  other  loss,  and  is  to  be  borne  in  like  proportions." 

SAME— ADVANCES  BY  PARTNER. 

43.  Advances  to    the   firm   by  a  partner  in  excess  of  his 
agreed  contribution  constitute  a  loan,  and  not  capital. 

Any  advances  of  money  to  the  firm  by  a  partner  in  excess  of  his 
contribution  agreed  to  be  made  in  the  contract  do  not  come  with 
in  the  designation  of  capital;  the  same  being  nothing  other  than  a 
loan  to  the  partnership,  whereby  the  loaner  becomes  a  creditor  of 
the  firm,  though,  of  course,  not  of  equal  standing  with  outside  cred- 
itors in  respect  of  payment  in  case  of  the  firm's  insolvency.^" 

TO  Bates,  Partn.  §  815. 

Ti  See  Everly  v.  Durborrow,  8  Phila.  (Pa.)  93;  Cameron  t.  Watson,  10  Rich. 
Eq.  (S.  C.)  64  (but  see  comment  on  these  two  cases  in  Whitcomb  v.  Converse, 
119  Mass.  38,  43);  Knapp  v.  Edwards,  57  Wis.  191.  15  N.  W.  140;  Yobe  v. 
Barnet,  3  Watts  &  S.  (Pa.)  81.  Where  partnership  capital  is  supplied  solely  by 
ane  partner,  the  other  giving  time  and  labor,  aud  the  profits  and  losses  are  to  be 
shared  equally,  interest  first  to  be  paid  upon  such  capital  before  any  division  of 
profits,  and  such  capital  is  to  be  repaid  on  dissolution  by  death  of  one  partner, 
the  partner  giving  labor  and  time  is  not  liable  to  contribute  to  a  loss  on  capital 
upon  realization  after  the  death  of  the  other  partner.  (Wood  v.  Scoles,  1  Ch.  App. 
369,  applied.)    Aldridge  v.  Aldridge,  8  Reports,  189;  Id.  [1894]  2  Ch.  97. 

T2  Bates,  Partn.  |  815.  »«  See  post,  p.  278  et  seq. 


118  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.    3 

SAME— LIMITATIONS  AS  TO  CONTRIBUTIONS   TO    CAPITAL. 

44.  A  partner  cannot  either  increase  or  diminish  his  con- 
tribution except  by  a  consent  of  all  the  members  of 
the  firm. 

A  partner  cannot  be  required  to  contribute  anything  more  than 
he  has  committed  himself  to  in  the  agreement,  no  matter  what  the 
emergencies  of  the  business  may  be,  and  no  matter  if  the  alternative 
is  of  necessity  a  dissolution  of  the  partnership.''*  A  partner  can- 
not increase,  of  his  own  motion  merely,  his  proportion  of  the  cap 
ital;  ''^  and  if  he  fails  to  draw  out  his  profits  annually,  so  that  they 
accumulate  in  the  hands  of  the  firm,  the  accumulation,  unless  it  is 
expressly  agreed  to  that  effect  between  all  the  partners,  does  not 
become  incorporated  in  the  capital.^'  Neither,  except  by  agree- 
ment between  all  the  partners,  can  the  accumulation  be  regarded 
as  a  loan  to  the  firm,  for  which  interest  can  be  demanded.  What 
the  partner  has  agreed  to  perform  in  the  way  of  contribution  to 
the  capital  he  must  perform,  however,  to  the  utmost,  if  necessary, 
and  he  has  not  the  right  to  withdraw  at  any  time  during  the  exist- 
ence of  the  partnership  any  part  of  his  contribution."  To  stato 
the  matter  generally,  a  partner  cunnot  either  increase  or  diminish 
his  contribution,  except  by  consent  of  all  the  members  of  the  firm, 
during  the  firm's  continuance.''*  It  is  no  such  diminution  if  a  pari 
ner  agreeing  to  contribute  property  to  a  certain  amount  places  with 
the  firm  property  of  a  greater  worth,  and  subsequently,  upon  its 
being  reduced  to  money,  takes  back  the  surplus.  But  in  a  case 
where  property  thus  placed  with  the  partnership  consisted  of  build 
ings,  and  these  subsequently  were  burned  down,  and,  at  the  ex 
pense  of  the  partnership,  were  rebuilt  at  a  cost  greater  than  their 
original  valuation,  it  was  held  that  the  property  could  not,  at  the 

T4  Lindl.  Partn.  p.  321. 

TO  Fuluier's  Appeal,  90  Pa.  St.  143;  Cock  t.  Evans,  9  Yerg.  (Tcnn,)  287;  Farmer 
V.  Samuel,  4  Ldt.  (Ky.)  187. 

•'8  Dean  v.  Dean,  54  Wis.  23,  11  N.  W.  239.  See,  al-so,  Dumont  v.  Uuepprecht, 
38  Ala.  175;  Tiitt  v.  Laud,  50  Ga.  339.  But  see  Raymond  v.  Putnam,  44  N.  H. 
160. 

TT  Lindl.  Partn.  p.  321. 

7  8  Id.  See  Heslin  v.  Hay,  L.  R.  15  Ir.  431,  and  observations  of  Lord  Bramwell 
In  Bouch  V.  Sproule,  12  App.  Cas.  405. 


§   46)  WHAT    CONSTITUTES    PARTNERSHIP    PROPERTY.  119 

dissolution  of  the  partnership,  be  recovered  by  the  owner,  npon  his 
reimbursing  the  firm  for  its  outlay,  it  having  meantime  enhanced 
largely  in  value.  The  original  owner,  having  allowed  the  rebuild- 
ing to  be  done  with  the  joint  funds,  had  waived  his  right  to  with- 
draw the  premises.®"  However,  such  property,  thus  wming  with- 
in the  ownership  of  the  firm,  would  not  be  regarded  as  capital  in 
excess  of  the  individual's  agreed  contribution,  but  rather  firm  assets 
simply.  It  will  be  seen  elsewhere  that  for  money  borrowed  by  a 
partner,  to  be  contributed  by  him  to  the  partnerehip  capital  as  his 
proportionate  part  of  it,  the  firm  is  not  liable,*^  and  the  reason  of 
this  is  easily  to  be  gathered  from  what  has  been  said  above.  The 
debt  would  be  a  personal  one  merely. 

PARTNERSHIP  PROPERTY  IN  GENERAL. 

45.  The  agreement  of  the  partners  is  the  test  of  ^what  is, 
and  what  is  not,  partnership   property. 

It  is  for  the  partners  to  determine  by  agreement  among  them- 
selves what  shall  be  the  proi)erty  of  them  all.  and  what  shall  be 
the  separate  property  of  some  one  or  more  of  them.  Moreover,  it 
is  competent  for  them,  by  agreement  among  themselves,  to  convert 
what  is  the  joint  property  of  all  into  the  separate  property  of  some 
one  or  more  of  them,  and  vice  versA.  It  is  obvious,  therefore,  that 
the  only  true  method  of  determining,  as  between  the  partners  them- 
selves, what  belongs  to  the  firm,  and  what  not,  is  to  ascertain  what 
agreement  has  been  come  to  upon  the  subject.  If  there  is  no  ex 
press  agreement,  attention  must  be  paid  to  the  source  whence  the 
property  was  obtained,  the  purpose  for  which  it  was  acquired,  and 
the  mode  in  which  it  has  been  dealt  with. 

SAME— WHAT  CONSTITUTES. 

46.  The  property  of  the  firm  consists,  prima  facie,  of  every- 
thing in  its  hands  representing  the  contributions  of 
the  partners  to  the  common  stock,  and  the  product 
thereof. 

Unless  it  is  shown  to  be  otherwise,  the  firm  property  includes 
everything  in  the  hands  of  the  firm  that  was  put  into  the  common 

•0  Clark's  Appeal,  72  Pa.  St.  142.  "i  See  post,  p.  229. 


120  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.    3 

stock  at  the  beginning  of  the  partnership,  or  subsequently  went 
into  it  as  the  result  of  the  operations  of  the  partnership,  through  tlie 
employment  of  either  the  firm  property  or  the  services  of  the  part- 
ners."    If  the  partner  contributed  property  to  the  firm,  to  become 

8  2  Lindl.   TartD.  p.  324.     Property   bought  with  money  lent  by  the  firm  to  one 
partner  is  not  partnership  property.     Smith  v.  Smith,  5  Ves.  193.    Whether  land 
ia  partnership  property  or  not  ifl  determined  by  the  intention  of  the  partners.     Wil- 
son V.  Black,  164  Pa.  St.  555,  30  Atl.  488.    "That  intention  may  be  expressed  in 
the  deed  conveying  the  land,  or  in  the  articles  of  partnership;  but,  when  it  is  not 
BO  expressed,  the  circumstances  usually  relied  uiwn  to  determine  the  question  are 
the  ownership  of  the  funds  paid  for  the  land,  the  uses  to  which  it  is  put,  and  the 
manner  in  which  it  is  entered  upon  the  books  of  the  firm.    Where  real  estate  is 
bought  with  partnership  funds  for  partnership  purposes,  and  is  applied  to  partner- 
ship uses,  or  entered  and  carried  in  the  accounts  of  the  firm  as  a  partnership  asset, 
it  is  deemed  to  be  firm  property;  and  iu  such  case  it  makes  no  difference,  in  a  court 
of  equity,  whether  the  title  is  vested  in  all  the  partners  as  tenants  in  common,  or 
in  one  of  them  or  in  a  stranger.    If  the  real  estate  is  purchased  with  partnership 
funds,  the  party  holding  the  legal  title  will  be  regarded  as  holding  it  subject  to  a 
resulting  trust  in  favor  of  the  firm  furnishing  the  money.    In  such  case  no  agree- 
ment is  necessary,  and  the  statute  of  fniuds  has  no  application."     Uubinson  Bank 
V.  Miller,  153  111.  244,  253,  38  N.  E.  1078.    Sec,  also,  Childs  v.  Pellett,  102  Mich. 
558,  61  N.  W.  54.    Two  partuors  bought  land  in  their  indindual  names,  the  first 
payment  being  made  out  of  the  proceeds  of  a  note  sigui'd  by  each  of  them.     An 
account  describing  the  land  was  opi-ncd  in  the  firm  books,  in  which  the  purchase 
price  of  the  land  was  debited,  and   tlie  seller   was  credited  with   a   like  amount. 
The  bank  which  discounted  the  note  was  charged  with  its  proceeds,  and  the  pro- 
ceeds were  credited  to  bills  payable,  with  a  memorandum  that  the  contract  of  sale 
had  been  assigned  to  the  bank  as  collateral  security.    Other  payments  on  the  inir- 
chase  price  to  the  seller  were  charged  to  him.    Interest  paid  on  deferred  payments 
was  charged  to  the  land  account.    One  of  the  partners  was  credited  with  travel- 
ing expenses  incurred  on  a  trip  relating  to  the  land.    Held,  that  an  intention  to 
treat  the  land   as  firm   property   was  shown.     Where  land   is  bought   in   the  indi- 
vidual  names  of  two  partners  and   two  other  persons,   under  an  agreement  that 
each  is  to  own  a   fixed  undivided  interest,   and  that,  as  between  themselves,  the 
liability   of   the  buyers   under  the  contract  and   on  all   notes   given   for  purchase 
money  shall  be  in  proportion  to  the  interest  of  each  in  the  land,  and  that,  if  any 
of  them  should  pay  any  money  on  behalf  of  any  of  the  othtTS,  he  should  have  a 
lien  on  the  interest  of  the  one  for  which  the  payment  was  made,  and  none  of  the 
firm  money  was  used  in  the  purchase,  a  strong  presumption  arises  tliat  the  part- 
ners did  not  mean  to  treat  the  land  as  partnership  property.    Lindsay   v.   Race. 
103  Mich.  28,  61  N.  W.  271.    Under  Civ.  Code,  §§  2401-2403,  providing  that  prop- 
erty contributed  by  the  partners  shall  be  partnership  property,  the  fact  that  they 
agree  to  retain  the  "title"  in  themselves  separately  is  immaterial.    Chapman   v. 
Hughes.  104  Cal.  302,  37  Pac.  1048.    An  agreement  in  a  partnership  contract  by 
one  of  the  partners  to  contribute,  as  his  capital  to  the  business,  certain  land,  "it 


§   47)  PROPERTY    HABITUALLY    IN    USE    OF    FIRM.  121 

part  of  its  stock,  the  firm  owns  it,  and  that  not  only  as  to  its  value 
at  the  time  of  the  contribution;  for  any  increase  in  value  it  may 
have  developed  since  the  contribution  belongs  to  the  firm,  and  not 
to  the  contributing  partner."  Property,  simply  because  bought  and 
paid  for  by  one  partner  out  of  his  own  funds,  will  not  be  presumed 
to  belong  to  that  partner,  if  it  has  been  used  and  treated  as  prop- 
erty* of  the  firm,  for  the  presumption  will  be  that  he  has  contrib- 
uted it  to  the  common  stock.'*  The  good  will  of  the  business  is 
partnership  property." 

SAME— PROPERTY  HABITUALLY  IN  USE  OP  FIRM. 

47.  Property  habitually  in  the  use  of  the  firm  is  not  neces- 
sarily partnership  property. 

The  premises  upon  which  the  business  is  principally  conducted 
are  often  the  sole  property  of  a  partner,  and  so  are  often  the  tools 
of  a  trade,  the  furniture  of  an  otlice,  and  even  what  is  known  as 
"stock  in  trade.''  '•     In  the  case  of  a  partnership  in  profits  merely, 

being  understood  and  agreed  that  said  land  is  the  sole  property"  of  said  partner, 
means  the  use  of  the  land  during  the  continuance  of  the  partnership,  and  does  not 
pass  to  the  firm  the  equitable  title  to  the  laud.  (Dunbar,  C  J.,  dissenting.)  Rich- 
mond V,  Voorhees,  10  Wash.  316,  38  I'ac.  1014.  Where  an  immovable  is  bought 
in  the  partnership  name,  or  by  one  partner  for  the  firm,  the  partners  become  joint 
owners.    Calder  v.  Creditors,  47  La.  Ann.  346,  16  South.  852. 

83  See  ante,  ]>.  114;  Robinson  v.  Asbton,  L.  R.  20  Eq.  25.  The  enhancement  in 
value  of  a  contribution  during  the  partnership  inures  to  the  firm  which  is  also 
chargeable  with  any  depreciation.    J.  Pars.  Partn.  {  25. 

>>*  Ex  parte  Hare,  1  Deac.  16,  2  Mont.  &  A.  Bankr.  478;  Lindl.  Partn.  p. 
325;  Bates,  Partn.  §  262.  See,  also,  generally,  Traphagen  v.  Burt,  67  N.  Y.  30; 
Kruschke  t.  Stefan,  83  Wis.  373,  53  N.  W.  679;  Davis  v.  Davis,  60  Miss.  615. 

8  8  Lindl.  Partn.  p.  327. 

8  6  Lindl.  Partn.  p.  3i:S;  Burdon  v.  Barkus,  3  Giff.  412,  4  De  Gex,  F.  &  J.  42; 
Ex  parte  Owen,  4  De  (tox  &  S,  351;  Ex  parte  Smith,  3  Madd.  63.  Partners  may 
stipulate  that  the  ownership  of  property  may  remain  in  one  while  the  firm  could 
have  only  the  use  of  it.  Where  articles  of  partnership  provide  that  one  partner  is 
to  put  into  the  capital  stock  a  building,  machinery  valued  at  $9,650,  and  the  other 
two  to  put  in  $2,500,  making  a  total  capital  stock  of  $12,150,  and  to  pay  the 
other  interest  on  the  excess  put  in  by  him,  each  partner  will  have  a  joint  owner- 
ship of  the  building  and  machinery.  Taft  v.  Schwamb,  80  111.  289.  Blanchard  v. 
CooUdge,  22  Pick.  (Mass.)  151;  Howe  v.  Howe,  99  Mass.  71;  Bowker  v.  Glenson 
(N.  J.  Ch.)  7  Atl.  885;  Moody  v.  Rathburn,  7  Minn.  89  (Gil.  58);  Bartlett  r, 
Jones,  2  Strob.  (S.  C.)  47L 


122  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.    O 

there  is  no  community  of  ownership  in  the  property  out  of  which 
the  profits  are  produced.*^  In  the  absence  of  express  agi-eement, 
the  test  by  which  to  determine  finally  whether  property  is  firm  or 
separate  is  its  status  with  reference  to  the  business  of  the  firm, — 
that  is,  how  it  was  brought  into  the  business,  and  for  what  purpose, 
as  well  as  how  it  is  treated  by  the  parties  in  their  firm  operations,** 
— the  bearing  of  which  expression  is  illustrated  by  the  two  cases 

8T  Pearce  v.  Pearce,  77  111.  284;  King  t.  Hamilton,  16  111.  190;  Flagg  v.  Stowe, 
85  III.  164;  Chase  v.  Barrett,  4  Paige  (N.  Y.)  148;  Champion  v.  Bostwick.  18 
Wend.  (N.  Y.)  175;  Berthold  v.  Goldsmith,  24  How.  536;  London  Assur.  Co.  v. 
Drennen,  116  U.  S.  461,  6  Sup.  Ct.  442;  French  v.  Styring.  2  C.  B.  (N.  S.)  357; 
Fromont  v.  Coupland,  2  Bing.  170;  Cf.  Dwinel  v.  Stone,  30  Me.  384. 

8  8  Lindl.  Partn.  p.  329.  Under  a  partnership  agreement  which  requires  one  of 
the  partners  to  "furnish  for  the  use  of  the  copartnership,  during  its  continuance, 
all  necessary  teams,  •  •  •  in  conducting  the  business,"  teams  owned  by  such 
member,  and  applied  by  him  to  the  use  of  the  firm,  do  not  become  partnership 
property.  Van  Voorhis  v.  Webster,  85  Hun,  591,  33  N.  Y.  Supp.  121.  On  an  is- 
sue whether  certain  mill  property  was  partnership  property,  it  appeared  that  the 
partnership  was  a  milling  concern,  to  form  which  the  partners  contributed  equally, 
and  had  existed  prior  to  the  purchase  of  an  undirided  half  interest  in  the  prem- 
ises by  one  partner  of  the  other;  that  the  property  was  taxed  in  the  firm  name, 
and  that  repairs  and  new  machinery  for  the  mill  were  paid  for  out  of  the  firm 
bank  account;  and  that  the  firm  had  sole  use  and  possession  of  the  property,  and 
outside  of  it  had  but  few  assets.  Held,  that  the  premises  were  partnership  prop- 
erty. Booher  v.  Perrill,  140  Ind.  529,  40  N.  E.  36.  Where  a  firm  allows  one 
member  to  retire,  and  take  his  undivided  interest  in  the  firm  real  estate  as  se- 
curity for  a  debt  due  him  from  the  firm,  the  cc.ntinuing  members,  in  adjusting  ac- 
counts inter  se,  cannot  treat  such  real  estate  as  partnership  property  without  sat- 
isfying his  lien.  Childs  v.  Pellett.  102  Mich.  558,  61  N.  W.  54.  Where  three 
men,  who  afterwards  became  copartners,  buy  land  with  their  individual  funds, 
each  taking  title  to  an  undivided  one-tliird  interest,  the  fact  that  they  afterwards 
use  the  land  for  firm  purposes,  and  repair  the  improvements  thereon  at  the  firm 
expense,  does  not,  in  the  absence  of  any  express  agreement  to  that  effect,  make 
the  land  firm  property.  Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078; 
Lamport  t.  Same,  Id.  Where  each  member  of  a  firm  holds  in  his  individual  name 
an  undivided  interest  in  land,  which  is  held  for  the  benefit  of  the  firm,  and  used 
for  partnership  purposes,  it  is  subject  to  firm  debts.  Childs  v.  Pellett,  102  Mich. 
558,  61  N.  W.  54.  Land  bought  in  the  names  of  members  of  a  firm  will  be  deemed 
partnership  property  where  it  appears  that  the  purchase  money  was  charged  in 
books  as  a  disbursement  by  the  firm,  and  that  the  firm  occupied  the  land,  and  paid 
the  taxes,  insurance,  and  all  other  expenses.  Dawson  v.  Parsons,  10  Misc.  Rep. 
428,  31  N.  Y.  Supp.  78.  On  an  issue  whether  immovable  property  was  acquired 
for  the  partnership,  entries  on  the  partnership  books  are  admissible.  Calder  v. 
Creditors,  47  La.  Ann.  340,  1(3  South.  852.     Where  partnership  property  is  traced 


§   47)  PROPERTY    HABITUALLY    IN    USE    OF    FIRM.  123 

below.  Thus,  where  individuals,  having  received,  through  the  last 
will  of  their  father,  a  trading  business,  and  certain  lands  neces- 
sary for  the  transaction  of  such  a  business,  and  actually  used  by  the 
testator  in  connection  with  it,  had  carried  on  the  business  after- 
wards just  as  their  father  had  before,  the  lands  were  held  to  be 
partnership  property,  and  not  an  estate  in  joint  tenancy.*'  But 
where  two  persons,  owning  lands  jointly,  had  proceeded  to  work 
them  together  for  profit,  contributing  the  necessai*y  expenses  and 
sharing  the  losses  of  the  enterprise,  this  was  a  case  of  partnership 
as  to  profits  merely,®"  hence  the  property  was  not  partnership  prop- 
'  rty;  nor  would  (so  it  was  said  in  Steward  v.  IJlakeway"^)  that  char- 
acter attach  to  property  bought  with  these  profits,  and  used  in  the 
same  manner  as  the  other.  But  this  is  doubtful. °*  In  the  first 
case  the  parties  assumed  and  carried  on  a  trading  business,  with 
which  the  lands  came  to  tliem  as  an  essential  ingredient  of  it, 
whereas  in  the  other  the  huids,  being  first  the  joint  estate  of  the 
parties,  were  subjected  sinijily  to  the  co  operative  efforts  of  the  own- 
ers to  make  them  profitable',  neither  party  meantime  actually  man- 
ifesting any  intention  to  sink  his  identity  as  an  owner  in  his  char- 
acter of  a  partner.  The  distinction  is  often  a  fine  one  between  in- 
stances of  this  use  of  property,  wlirre  it  is  sought,  as  in  the  cases 
above,  to  have  it  stamped  as  the  property  of  the  firm,  rather  than 
of  the  individuals  composing  the  firm;  and,  to  avoid  all  questions 
of  this  nature,  care  should  be  taken  in  advance,  by  attaching  to 
property  the  desired  character,  expressly,  in  the  partnership  arti- 
cles. The  case  of  Steward  v.  Blakeway,  supra,  might  be  thought, 
and  justly,  to  conllict  with  the  rule  below  as  to  property  purchased 
with  partnership  funds." ^  Land  paid  for  out  of  profits  of  the  busi- 
ness, where  the  partnership  was  only  as  to  profits,  was  so  held  to 
be  partnership  property  in  Morris  v.  Jiarrett,®*  but  there,  there  had 
been  no  accounting  for  20  years.  The  better  rule  is,  however,  that 
such  land  would  belong  to  the  partnership,  rather  than  to  the  indi- 

to  the  possession  of  an  indindual  partner,  the  burden  is  on  him  to  show  that  it 
is  not  partnership  assets.     Hardin  t.  Jamison,  GO  Minn.  348,  62  N.  W.  394. 

8  9  Jackson  v.  Jackson,  9  Ves.  591,  7  Ves.  535;  Cf.  Brown  v.  Oakshot,  24  Beav. 
254,  and  Morris  v.  Barrett,  3  Younge  &  J.  384. 

80  Morris  v.  Barrett,  3  Younge  &  J.  384. 

•1  4  Ch.  App.  603.  L.  R.  6  Eq.  479. 

92  Morris  v.  Barrett,  3  Younge  &  J.  384;  Waterer  v.  Wateror,  L.  R.  15  Eq.  40" 

»3  Bates,   Partn.  §  257.  »*  Supra,  note  92. 


124  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.    3 

ridual  partners,  notwithstanding  Steward  v.  Blakeway.  Indeed, 
Pollock  says  that  it  is  doubtful  if  the  latter  case  was  one  of  pai-tner- 
ship,  anyway.'" 

SAME— PROPERTY  PURCHASED  WITH  PARTNERSHIP 

FUNDS. 

48.  Anything  purchased  by  a  partner  with  partnership 
funds  is  presumably  partnership  property,  without 
regard  to  the  name  in  w^hich  it  is  taken  and  held. 

The  fact  that  a  partner  has  actually  purchased  the  property,  us 
ing  his  own  name,  or  that  of  another  person,  as  the  individual  to 
hold  it,  does  not,  if  the  funds  of  the  partnership  were  employed 
in  making  the  purchase,  render  it  any  the  less  the  firm's  property.*' 
hi  a  case  where  the  firm  was  composed  of  two  partners,  and  cer- 
tain securities  were  purchased  with  partnership  funds,  and  were 
put  one  half  in  the  name  of  one  partner,  and  the  other  half  in  that 
of  the  other,  and  one  partner  sold  the  securities  held  in  his  name,  and 
with  the  proceeds  purchased  other  property  in  his  name,  it  was  held 
that  the  property  so  purchased  belonged  to  the  firm."^  Again, 
where  two  partnere  purchased  land  in  their  individual  names,  in 
undivided  moieties,  and  paid  off  the  outstanding  mortgage  on  it,  the 
funds  used  being  partnership  funds,  and  kept  an  account  of  it  in 
their  partnership  books,  under  the  name  "The  T.  Estate  Account," 
and  made  no  arrangement  for  a  partition  of  the  laud,  though  each 
built  and  lived  in  a  dwelling  on  separate  portions  of  it,  it  was  all 
held  to  be  partnership  property.**  In  all  such  cases  the  nominal 
owner  holds  as  a  trustee  of  the  firm,  to  the  extent  of  the  subject 
of  the  purchase."*  This  rule  applies  to  the  case  of  a  continuing  or 
surviving  partner,  also,  who  attempts  by  this  means  to  benefit  him- 
self to  the  fraud  of  his  quondam  partner,  or  to  the  fraud  of  the  de- 
ceased partner's  estate.^"* 

»B  Pol.  Partn.  art.  27,  note  5. 

96  Morris  v.  Barrett,  3  Younge  &  J.  384;  Smith  v.  Smith.  5  Ves.  193;  Robley 
T.  Brooke,  7  Elijah  (N.  S.)  90;  Scott  v.  McKinney,  98  Mass.  344;  Chapin  v. 
Clemitson,  1  Barb.  (N.  Y.)  311;  Tbursby  v.  Lidgenvood,  G9  N.  Y.  198. 

9  7  Fairfield  v.  PhiUips,  83  Iowa,  571,  49  N.  W.  1025. 

08  S(^  Ex  parte  McKenna  (Bank  of  England  Case),  3  De  Gex,  F.  &  J.  C45. 

99  Hardin  v.  Jamison,  60  Minn.  348,  62  N.  W.  394. 

100  Liudl.  Partn.  p.  325. 


§  4S)      PROPERTY  PURCHASED  WITH  PARTNERSHIP  FUNDS.        125 

Resell  ting  Tinists — Statute  of  LimitatioTis. 

The  conveyance  to  one  of  several  partners  of  real  estate  purchtised 
with  partnership  funds  creates  a  resulting  trust  in  favor  of  the 
lirni.'"^  And  it  is  an  important  question,  in  one  respect,  whether 
this  conveyance  is  made  with  or  without  the  knowledge  and  consent 
of  his  co-partners,  for  on  that  question  it  depends  whether  or  not  the 
statute  of  limitations  runs  against  the  trustee.  For,  as  a  general 
rule,  length  of  time  is  no  bar  to  a  trust  clearly  established,  and  ex- 
press trusts  are  not  within  the  statute  of  limitations,  because  the 
possession  of  the  trustee  is  presumed  to  be  the  possession  of  the 
cestui  que  trust.  But  time  begins  to  run  against  a  trust  as  soon 
as  it  is  openly  disavowed. *°'  It  is  often  the  case,  of  course,  that  the 
property  purchased  by  the  partner  in  his  own  name  was  so  pur- 
chased bona  tide;  he  being,  in  respect  of  the  funds  used  in  the 
purchase,  a  borrower  from  the  tinu,  in  which  case  the  presumption 
is  overcome  by  this  fact  being  shown. ^°' 

A  partner  does  not  need  to  account  to  the  firm  for  a  personal 
advantage  received  by  him  outside  of  the  firm's  affairs,  nor  for  one 
inside  its  affairs,  so  received,  if  the  benefit  was  given  with  the 
intention  that  he  should  enjoy  it  alone.^"* 

101  Fiiirchild  v.  Fairchild,  64  N.  Y.  471;  Buohan  v.  Sumner,  2  Barb.  Ch.  (N. 
Y.»  1G7;  Crow  v.  Drace,  01  Mo.  225;  Willet  v.  Brown,  Go  Mo.  138;  Matlack  v. 
.Tames,  13  N.  J.  Eq.  12G;  Campbell  t.  Campbell,  30  N.  J.  Eq.  415;  Jarvis  v. 
Brooks,  27  N.  H.  37;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562;  Buck  v.  Wiun,  11  B. 
Mon.  (Ky.)  320;  Siguurmy  v.  Munn,  7  Coun.  11;  Greene  v.  Surviving  Partners, 
1  Ohio,  535;  Bank  v.  Sawyer,  38  Ohio  St.  329;  Brooke  v.  Washington,  8  Grat. 
(Va.)  248;  Bergeron  v,  Ilichardott,  55  Wis.  129,  12  N.  W.  384;  Martin  v.  Morris, 
62  Wis.  418,  22  N.  W.  525. 

102  Trevost  v.  Gratz,  G  Wheat.  4S1;  Lewis  v.  Hawkins,  23  Wall.  Ill),  126; 
Railroad  Co.  v.  Durant,  95  U.  S.  576;  Speidel  v.  Henrici,  120  U.  S.  377,  7  Sup. 
Ct.  610. 

103  Lindl.  Partn.  p.  329.  See  Smith  v.  Smith,  5  Ves.  193;  Walton  v.  Butler, 
29  Beav.  428;  Gordon  v.  Gordon.  49  Mich.  501.  13  N.  W.  834;  Richards  y.  Man- 
son,  101  Mass.  482. 

104  Llndl.  Partn.  p.  325;  Campbell  v.  Mullett,  2  Swanst.  Ch.  551;  Thompeon  ». 
Ryan,  Id.  565,  note;  MoSatt  t.  Farquharson,  2  Browne,  Ch.  338. 


126  CH  iRACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

SAME— TITLE  TO  REAL  ESTATE. 

49.  A  partnership  cannot  hold  the  legal  title  to  real  estate 
in  its  firm  name. 

Personalty  may  be  acquired,  held,  or  transferred  by  a  partnership 
in  its  firm  name.  But  not  so  with  realty.  A  partnership  may  own, 
or  even  deal  in,  real  estate,  but  it  cannot  take  or  hold  the  legal 
title  in  its  firm  name.^**°  A  partnership,  as  we  know,  is  not  a  per- 
son, either  natural  or  artificial,  and  hence  no  legal  title  to  real 
estate  can  vest  in  it."'*  Nevertheless,  if  the  firm,  as  described  in 
the  deed  by  which  the  land  is  sought  to  be  conveyed  to  it,  is  suflB- 
ciently  significant  of  the  actual  individuals  composing  the  partner- 
ship to  enable  them,  or  any  one  or  more  of  them,  to  be  identified 
with  certainty,  then  the  instrument  is  good,  at  least,  as  a  contract 
to  convey,  and  is  superior  to  any  subsequent  conveyance.* °^  When 
a  deed  is  made  to  a  partnership,  all  the  individual  partners  be- 
ing named  as  gi-antees  in  it,  the  individuals  so  named  will  hold 
as  tenants  in  common,  without  survivorship.'"*  When  the  deed 
is  simply  to  one  partner,  without  any  mention  of  the  firm,  this 
partner  will  take  and  hold  the  legal  estate,  the  trust  being  a  mat- 

»0B  See  ante,  p.  llii.  See,  also,  Rammelsberg  v.  Mitchell,  29  Ohio  St.  22,  52; 
Perciftill  T.  Piatt,  36  Ark.  456.  Real  estate  purchased  with  partnership  funds 
for  partuership  uses,  though  the  title  be  taken  in  the  name  of  one  partner,  is, 
in  equity,  treated  as  personal  property  so  far  as  is  necessary  to  pay  the  debts  of 
the  partnership,  and  adjust  the  eijuities  of  the  partnc-rs.  For  this  purpose,  in  the 
case  of  the  death  of  such  partner,  the  survivor  can  sell  the  real  estate;  and, 
though  he  cannot  transfer  the  legid  title  which  passed  to  the  heirs  or  the  devisees 
of  the  deceased,  the  sale  vests  the  equitable  ownership,  and  the  purchaser  can 
compel  a  conveyance  of  the  legal  title.  Shanks  v.  Klein,  104  U.  S.  18.  See,  also, 
Matthews  v.  Hunter,  67  Mo.  293;  Keith  v.  Keith,  143  Mass.  2G2,  9  N.  E.  5G0; 
Burnside  v.  Merrick,  4  Mete.  (Mass.)  537;  Andrews'  Heirs  v.  Brown's  Adm'r, 
21  Ala.  437;  Solomon  v.  Fitz^'crald,  7  Hoisk.  (Tcnu.)  552;  BufFum  v.  Buffum,  49 
Me.  108;  Murphy  v.  Abrams,  50  Ala.  293. 

108  Holmes  v.  Moon,  7  Heisk.  (Tenn.)  506.  But  the  equitable  title  is  in  the 
firm.  See  Riddle  v.  White-hill,  135  U.  S.  621,  10  Sup.  CL  924;  Harris  v.  Harris, 
153  Mass.  439,  26  N.  E.  1117;  Paige  v.  Paige,  71  Iowa,  318,  32  N.  W.  360. 

107  Dunlap  v.  Green,  8  C.  C.  A.  600,  60  Fed.  242;  Percifull  v.  Phitt,  36  Ark. 
456;  Arthur  v.  Weston,  22  Mo.  378;  Moreau  v.  Saffarans,  3  Sneed  (Tenn.)  .095. 
See,  also,  Chavener  v.  Wood,  2  Or.  182. 

108  Percifull  v.  Piatt,  36  Ark.  464;  Riddle  v.  Whitehill,  135  U.  S.  621.  (534.  10 
Sup.  Ct.  924. 


§   50)  PARTNERSHIP    REALTY    DEEMED    PERSONALTY.  127 

ter  for  proof  aliunde.  When  in  the  deed  the  firm  style  only  is  used 
in  describing  the  grantee,  which  firm  style  contains  the  complete 
name  of  an  actual  partner  at  the  time,  such  partner  takes,  under  the 
deed,  a  trust  for  the  benefit  of  all  the  members  of  the  firm.^"*  But 
if  the  firm  style  only  is  used  in  the  deed,  in  expressing  the  grantee, 
and  the  firm  style  so  used  contains  no  name  of  an  actual,  existing 
partner,  the  deed  fails  to  pass  a  legal  estate  to  any  one,  and  such 
legal  estate  is  thereafter  in  the  grantor,  although  he  holds  in  trust 
for  the  firm.*** 


SAME— WHEN  PARTNERSHIP  REALTY  DEEMED  PER- 
SONALTY. 

60.  All  laDd  that  has  become  property  of  the  firm  is,  for 
the  exigencies  of  the  firm.,  personal  property,  un- 
less some  express  stipulation  to  the  contrary  has 
been  made. 

In  England  the  rule  is  broader,  for  there  such  land  would  be  re- 
garded as  personal  property  in  any  event.*''  So  it  is  said  in  Darby 
T.  Darby:***  "Whenever  a  partnership  purchases  real  estate  for 
the  partner.ship  pur|K)ses,  and  with  the  partnerehip  funds,  it  is,  as 
between  the  real  and  personal  representatives  of  the  partners,  per- 
sonal estate."  And  this  is  so,  it  was  there  further  held,  even  where 
the  real  estate  is  the  stock  in  trade,  and  the  buying  and  selling  it 
the  business  of  the  firm.  The  American  rule  is  embodied,  rather, 
m  the  case  of  Shearer  v.  Shearer,**'  where  it  was  held  that  the 
change  of  chai-acler  of  real  to  personal  estate  "is  worked,  if  at  all, 
for  the  purpose  of  adjusting  the  affairs  of  the  partnership";  and  it 
seems  that  the  personal  character  does  not  adhere  to  it,  for  any 
purpose,  further  than  this.***     So  it  has  been  held  by  the  supreme 

109  Holmes  v.  Jarrett,  7  Heisk.  (Teun.)  506. 

110  Tidd  V.  Kines,  26  Minn.  201,  2  N.  \V.  497. 

111  Lindl.  Partn.  p.  343,  Steward  v.  blakeway,  4  Ch.  App.  603,  L.  R.  6  Eq.  479. 

112  3  Drew.  495,  50G,  quottHl  with  approval  in  Lindl.  Partn.  p.  346.  But  this 
general  rule  may  be  excluded  by  an  express  or  implied  agreement  that  the  land 
shall  not  be  sold.     Id. 

113  98  Mass.  107.  See,  al.so,  Allen  v.  Withrow,  110  U.  S.  119,  3  Sup.  Ct.  517; 
Shanks  v.  Klein,  104  U.  S.  18. 

11*  As  between  the  heirs  and  the  personal  representatives  of  a  deceased  part- 
ner,  lands  not  needed  for  the  payment  of  partnership  debts  go  to  the  heirs,  and 


128  CHARACTERISTIC    FEATURES    OF    PARTXERSHIPS.  (Ch.   '6 

court  of  the  United  States  that  "real  estate  purchased  with  partner- 
ship funds  for  partnership  uses,  though  the  title  be  taken  in  the 
name  of  one  partner,  is  in  equity  treated  as  personal  property,  so 
far  as  is  necessary  to  pay  the  debts  of  the  partnership  and  to  ad- 
just the  equities  of  the  partners,  but  the  principle  of  equitable  con- 
version has  no  further  application."  '''  The  aid  of  equity  in  such 
cases  is  invoiced  merely  that  the  trusts  may  be  dechired,  anil  the 
legal  title  be  made  to  conform  to  the  equitable  or  beneficial  in- 
terest. There  seems  to  be  no  reason,  outside  of  the  exigencies  of 
the  settlement  of  the  affairs  of  the  partnership,  for  the  aid  of 
equity  in  this  connection;  for  otherwise  equity  would  be  asked  to 
depart  from  the  purpose  for  which  its  aid  was  first  sought,  and  so 
even  to  the  extent  of  modifying  the  rules  controlling  the  descent  of 
the  propei-ty  of  individuals.     For,  the  settlement  being  once  made, 

the  same  rule  arpHes  to  the  proceeds  of  realty.    Bee  Collumb  v.  Read,  24  N.  Y. 
iiOG;  Fostir's  Appeul.  74   Pa.  St.  301;  Dyer  v.  Clark,  5  Mete  (Mass.)  502;  Wil- 
cox T.   Wilcox.  13  Allen   (Mass.)   252;   Black  ▼.   Black,   15  Ga.  445,    Partnership 
lands  descend  to  the  In  rs  subject  to  partnership  debts.     Shearer   ▼.   Shearer,  98 
Mass.  Ill;  Gray  v.   Palmer,  i)  Cal.  61G,  63U;   Holland   v.   Fuller,  13  Ind.   195; 
Scruggs  V.  Blair,  44  Miss.  400,  412.    The  widow  has  dower  in  partnership  realty, 
but  such  dower  right  is  subject  to  the  payment  of  the  partnership  debts.    See  Wil- 
let  V,  Browu,  G5  Mo.  138;  (Jrissom  v.  Moore,  IW  Ind.  2t>G.  6  N.  E.  l>29;  Gray  v. 
Palmer,  9  Cal.  016,  639.    In  an  action  by  one  partner  against  his  coimrtner  to 
dissolve  the  partnership  and  wind  up  its  affairs,  the  partnership  real  esUte  waa 
sold  under  the  order  of  court;  the  proceeds  to  be  apphed  in  payment  of  the  firm 
debts,  and  the  surijiiis,  if  any,  divided  between  the  partners.    Held,  that  the  pur- 
chaser at  the  sail'  took  the  land  free  from  any  inchoate  interest  of  the  wives  of 
the  partners,  and  tliat  it  was  immaterial  that  the  land  brought  a  price  in  excess 
of  the  amount  nit-essary  to  pay  the  firm  debts.     Woodward-Uolmes  Co.  t.  Nudd, 
58  Minn.  230,  59  N.  W.  1010.     Partnersliip  realty  is  subject  to  all  the  attributes 
of  personal  property  until  the  final  settlement  of  the  partnership  affairs,  and  after 
such  settlement  any  real  estate  that  may  be  left  resumes  its  attributes  of  real 
proijerty,  and  descends  to  the  heirs.    Darrow  v.  Calkins,  6  App.  Div.  28,  39  N. 
Y.  Supp.  527.    Land  which  is  partnership  property  is,  as  between  partners  and 
those  dealing  with  them   with  knowledge  of  the  facts,  personal  estate.     Moore  ▼. 
Wood,   171   Pa.   St.  365,  33  AtJ.  03.    Generally,    for   what  purposes   partnership 
realty  is  deemed  personalty,  see  Rovelsky  v.  Brown,  92  Ala.  522,  9  South.  182; 
Woodward-Holmes  Co.  v.  Nudd,  58  Minn.  236,  59  N.  W.  1010;  Robinson  Bank  v. 
Miller,  153  111.  244,  38  N.  E.  1078:  Paige  v.  Paige,  71  Iowa,  318,  32  N.  W.  360; 
Fairchild  v.  Fairchild,  64  N.  Y.  471. 

116  Riddle  V.  Whitehill,  135  U.  S.  021.  t;;U-,,  10  Sup.  Ct.  924.  And  see  Clagett 
V.  Kilbourne,  1  Black,  346;  Shanks  v.  Klein,  104  U.  S.  18;  Allen  v.  Withrow,  110 
D.  S.  119,  3  Sup.  Ct.  517. 


{§   51-52)       CONVERSION    OF    JOINT    INTO    SEPARATE   PROPERTY.  129 

the  partners  are  partners  no  more,  but  individuals  merely,  and  their 
property  interests  are  only  those  of  individuals. 

SAME  —  CONVERSION    OF    PARTNERSHIP    PROPERTY    INTO 
SEPARATE  PROPERTY,  AND  VICE  VERSA. 

51.  By  agreement  of  all   the  partners,  firm  property  may 

be  converted   into  separate   property,  and   separate 
property  may  be  converted  into  firm  property. 

52.  In  the    absence  of  fraud,  such   agreements   are   good, 

even  against  creditors. 

What  Bights  a  Partner  JIa.x  in  Firm  Property. 

We  have  set'n  that  the  property  of  a  partnership  is  strictly  such, 
in  contradistinction  to  what  mijzht  otherwise  be  individual  propi'rty, 
accordinfj;  to  the  several  interests  of  the  partners  in  the  linn;  and 
we  shall  see  that  the  onl}-  right  of  a  partner  to  the  body  of  such 
property  refers  to  such  share  as  shall  be  coming  to  him  afier  a 
dissolution  shall  have  been  had,  and  a  settlement  of  all  firm  debts.*'" 
From  this  it  appears  that  such  a  settlement  contemplates  neces- 
sarily a  payment  of  firm  debts  out  of  firm  property,  as  far  as  pos- 
sible. It  must  not  be  inferred  from  this,  however,  that  creditors 
of  a  partnership  have,  by  reason  alone  of  the  debts  due  them,  any 
rights  in  this  property.  If  they  had,  then  any  firm  that  owed  any- 
thing at  all  would  find  it  difficult  to  do  business;  for  it  could  give 
no  clear  title  to  anything  it  might  sell,  the  purchaser  having  in 
such  case  to  take  the  commodity  incumbered  always  with  the  lien 
of  the  creditor.^ ^' 

W/tat  Riglds  a  Creditor  Has  in  Firm  P-aperty. 

This  manner  of  paying  firm  creditors  out  of  firm  property  is  not, 
therefore,  resorted  to  so  much  in  deference  to  any  rights  of  cred- 
itors as  to  the  right  of  the  par  mere  to  manage  their  firm  allairs 
most  conveniently  for  themselves."*  As  it  was  said  by  the  court 
in  Case  v.  Beauregard,"*  defining  such  rights  as  creditors  have  in 

!!•  See  post,  p.  132. 

"T  See  i)ost.  p.  273;   Lindl.  Partn.  p.  334. 

118  See  post,  p.  273,  "Distribution." 

110  99  U.  S.  119,  124.  See,  also,  Kelly  v.  Scott,  49  N.  Y.  595;  Huiskamp  v. 
Wagon  Co..  121  U.  S.  310,  7  Sup.  Ot.  899;  Fitzpatrick  v.  Flannagan,  100  U.  S. 
t>48,  1  Sup.  Ct.  3G9.  Each  partner  may  compel  property  in  immovables  acquircJ 
r.EO.PART.— 9 


130  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (^Ch.   3 

the  premises:  "This  is  an  equity  the  partners  have  as  between 
themselves,  and  in  certain  circumstances  it  inures  to  the  benefit  of 
the  creditors  of  the  firm."  And  the  court  says  further:  "Their 
equity  is  a  derivative  one.  It  is  not  held  or  enforceable  iu  their 
own  right.  It  is  practically  a  subrogation  to  the  equity  of  the  in- 
dividual partner,  to  be  made  effective  only  through  him."  This  be- 
ing the  case,  such  rights  as  creditors  have,  being  merely  equitable, 
as  we  have  seen,  are  enforceable  only  when  the  property  is  "within 
control  of  the  court,  and  in  the  course  of  administration, — brought 
there  by  the  bankruptcy  of  the  firm,  or  by  an  assignment,  or  by 
the  creation  of  a  trust  in  some  mode." 

Conveimon  of  Partnership  or  S'parate  Property, 

It  follows,  then,  that  the  conversion  of  partnership  property  into 
separate  property,  or  of  separate  property  into  partuershij)  prop 
erty,  if  done  with  the  consent  of  all  the  partners,  is  valid,  and  valid 
liot  only  as  between  the  partners  themselves,  but  also  as  to  outside 
persons  who  have  dealt  with  the  firm  or  the  persons  composing  it, 
and  are  creditors  as  the  result  of  such  dealings.^ ^^  Fraud,  however, 
vitiates  all  things  in  which  it  is  involved;  licnce,  if  such  a  conver- 
sion is  attempted  with  a  fraudulent  purpose,  it  is  void.*^' 

What  Amounts  to  Fraud  in  Connection  with  Such  Irajisfers. 

And  fraud,  in  this  connection,  does  not  imply  fraud  actual  and 
deliberate  only,  but  anything,  without  regard  to  the  intention  un- 
derlying it,  to  which  the  law  imputes  fraud  by  reason  of  the  cir- 

for  the  partnership  to  be  applied  on  partiurship  debts,  and  in  the  event  of  a 
cession  by  one  partner  the  right  passes  to  the  syndic.  Calder  v.  Creditors,  47  La. 
Ann.  340,  IG  South.  852. 

120  Creditors  are  not  entitled  to  be  consulted.  Lindl.  Partn.  p.  334;  Campbell 
V.  MuUett,  2  Swanst.  Ch.  575;  Ex  parte  Clarkson,  4  Deac.  &  C.  56;  Ex  parte 
Peake,  1  Madd.  358;  Darby  v.  Gilli;,'an,  33  W.  Va.  240,  10  S.  E.  400;  Huiskamp 
V.  Wagon  Co.,  121  U.  S.  310,  7  Sup.  Ct.  8i)ii;  Allen  v.  Valley  Co.,  21  Conn.  130; 
Howe  T.  Lawrence,  9  Gush.  (Mass.)  553;  Stanton  v.  Westover,  101  N.  Y.  265,  4 
N,  E.  525);  Ketohum  v.  Durkee,  1  Barb.  Ch.  (N.  Y.)  480.  As  to  dealings  between 
one  partner  and  the  firm,  see  Bolton  v.  Puller,  1  Bos.  &  P.  539.  As  to  changes 
of  property  on  change  of  firm,  see  Lindl.  Partn.  p.  336;  Bates,  Partn.  §  550  et 
seq.;  Ex  parte  Rufliu,  6  Ves.  119;  Ex  pirte  Walker,  4  De  Gex,  F.  &  J.  509;  Thay- 
er V.  Humphrey,  91  Wis.  276,  64  N.  W.  1007;  Olson  v.  Morrison,  29  Mich.  395; 
Bulger  V.  Rosa,  119  N.  Y.  459,  24  N.  E.  853. 

121  Lindl,  Partn.  p.  338;  Ex  parte  Rowlandson,  1  Rose,  416;  Luff  v.  Horner,  .'i 
Fost.  &  F.  480. 


§§    51—52)       CONVERSION    OF   JOINT    INTO    SEPARATE    PUOPEKTY.  131 

cumstances.^^'  Thus,  generally,  where  the  conversion  appears  to 
have  been  attempted  by  an  insolvent  finn  or  an  insolvent  partner, 
or  by  a  firm  or  partner  in  conteniphition  of  insolvency,  fraud  may 
be  imputed  from  the  facts  proved.^^* 

Preferences  among  Creditors  not  JVecessarily  Evidence  of  Fraud. 

Whether  a  preference  among  creditors  amounts  to  an  evidence  of 
fraud  or  not  depends  upon  the  aspect  given  to  preferences  by  the 
laws  prevailing  in  the  particular  locality  where  the  case  arises, 
though  generally  the  taint  of  fraud  attaches  where  the  purpose  of 
the  act  is  the  benefiting  of  the  person  making  the  preference,  with- 
out regard  to  whether  other  creditors  are  or  are  not  hindered  and 
delayed  to  the  knowledge  of  the  creditor  preferred.  Thus,  where 
one  of  two  failing  partners,  with  the  consent  of  the  other,  had 
given  a  mortgage  upon  chattels  theretofore  the  property  of  the  firm 
to  his  separate  creditor,  as  security  for  a  bona  fiile  debt,  the  mort- 
gage was  upheld,  and  the  court  there  said,  "A  debtor  in  failing 
circumstances  having  the  right  to  prefer  a  creditor,  if  the  preferred 
creditor  has  a  bona  fide  debt,  and  takes  a  mortgage  with  the  in- 
tent of  securing  such  debt,  and  not  with  the  purpose  of  aiding  the 
debtor  to  hinder  and  delay  other  creditors,  the  mortgage  is  valid, 
even  though  the  mortgagee  knows  that  the  debtor  is  insolvent,  iiud 
that  the  debtor's  intention  is  to  hinder  and  delay  other  creditors."  ^^* 

122  Constructive  fraud  is  suflicient  to  have  this  effect.  See  Lindl,  Partn.  p.  338; 
Ex  parte  Mayou,  4  De  Gex,  J.  &  S.  GG4;  Ex  parte  Walker,  4  De  Gex,  F.  &  J.  50U. 

1-3  lu  re  Kemptner.  L.  U.  S  Eq.  liNJ,  and  cases  cited  supra,  note  Vl'l. 

124  Huiskamp  v.  Wagon  Co.,  121  U.  S.  310,  311),  7  Sup.  Ct.  809.  See,  also, 
I<^tzpatrick  V.  Flannagan,  lOtJ  U.  S.  648,  1  Sup.  Ct.  309;  Case  v.  Beauregard,  99 
U.  S.  119;  Allen  v.  Center  Valley  Co.,  21  Conn.  130;  Goembel  v.  Arnett,  100  111. 
34;  Hapgood  v.  Cornwdl.  48  111.  64;  Dimon  v.  Hazard,  32  N.  Y.  'c^y,  Stanton  v. 
Westover,  101  N.  Y.  2Go,  4  N.  E.  529;  Second  Nat.  Bank  of  Red  Bank  v.  Farr 
(N.  J.  Ch.)  7  Atl.  S92.  Partners  may  divide  assets  among  themselves.  MoUne 
Wagon  Co.  v.  Rummell,  14  Fed.  155;  Poole  v.  Seney,  66  Iowa,  502,  24  N.  W.  27; 
Crane  v.  Morrison,  4  Savvy.  138,  Fed.  Cas.  No.  3,35.j;  Giddiugs  v.  Palmer,  107 
Mass.  269;  Jones  v.  Lusk,  2  Mete.  (Ky.)  356;  McKinney  v.  Baker.  9  Or.  74;  At- 
kins v.  Saxton,  77  N.  Y.  195;  Darland  v,  Rosencrans,  .56  Iowa,  122,  8  N.  W.  776. 
A  co-partnership  does  not  hold  its  property  in  trust  for  its  creditors,  nor  have  its 
creditors  a  lien  upon  its  property  by  reason  of  being  such,  so  as  to  preclude  it  from 
preferring  one  of  its  creditors  in  good  faith.  Aetna  Ins.  Co.  v.  Bank  of  Wilcox 
(Neb.)  67  N.  W.  449;  Richards  v.  Leveille,  44  Neb.  38,  62  N.  W.  304.  A  dis- 
position by  an  insolvent  firm,  with  the  consent  of  all  the  members,  of  its  assets 


132  CHARACTERISTIC    FEATURES    OF   PARTNERSHIPS.  (Ch.  3 

No  Formal  Instrument  Essential  to  the  Conversion. 

Provided  the  agreement  between  the  partners  by  which  the  act 
is  effected  is  executed.^ ^"^  there  need  be  no  written  conveyance  or 
other  formalities  in  order  to  complete  the  conversion  of  the  firm 
property  into  separate  property,  or  the  contrary.^'* 


PARTNERSHIP  SHARES. 

53.  The    characteristics  of  shares  in   partnerships  will  be 

treated  under  the  following  heads: 

(a)  Nature  of  a  partner's  share  (p.  132). 

(b)  Amount  of  each  partner's  share  (p.  138). 

(c)  Taking  on  execution  for  individual  debt  of  partner 

(p.  HI). 

(d)  Transfer  of  shares  (p.  153). 

SAME— NATURE  OF  A  PARTNER'S  SHARE. 

54.  The  interest  of  a  partner  in  partnership  property  Is  a 

peculiar  one,  and  is  best  indicated  by  simply  calling 
it  an  "estate  in  partnership." 

In  payment  of  nn  individual  debt  of  one  of  its  mombere,  Is  good  as  against  firm 
creditors.  Sylvester  v.  H  'urich  (Iowa)  «>1  N.  \V.  942.  Cf.  Jackson  Bank  ▼. 
Durfey,  72  Miss.  971,  18  South.  45G,  where  it  was  held  that  the  individual  mem- 
bers of  an  insolvent  firm  cannot  convert  the  partnership  estate  to  the  payment  of 
the  individual  debts  of  its  members,  leaving  the  firm  debts  unpaid.  See,  also,  Erb 
v.  West  (Miss.)  19  South.  829.  A  trust  deed  executed  by  a  member  of  an  insolvent 
firm,  on  his  own  property,  to  secure  the  individual  debt  of  his  partner,  for  which 
he  was  not  bound,  is  fraudulent  as  to  creditors  of  the  firm,  and  will  be  set  aside. 
Erb  v.  West,  supra.  See,  also.  Bates,  Partn.  §  559  et  seq.,  for  an  elaborate  re- 
view and  classification  of  the  cases. 

12  B  Agreement  must  be  executed.  Lindl.  Partn.  337;  Bates,  Partn.  §  541;  Ex 
parte  Wheeler,  Buck,  25;  Ex  parte  Wood,  10  Ch.  Div.  554;  Ex  parte  Sprague,  4 
De  Gei,  M.  &  G.  866;  Jones  v.  Neale,  2  Pat.  &  H.  (Va.)  339;  Fitzgerald  v. 
Christl,  20  N.  J.  Eq.  90;  National  Bank  of  Jacksonville  v.  Mapes,  85  111.  67; 
Smith  ▼.  Ramsey,  6  111.  373;  Way  v.  Stebbins,  47  Mich.  29G,  11  N.  W,  166; 
Mafflyn  v.  Hathaway,  106  Mass.  414;  Sharpe  v.  Johnston,  59  Mo.  557. 

126  Lindl.  Partn.  p.  334.  See  PUling  v.  PiUing,  3  De  Gex,  J.  &  S.  162;  Ex 
parte  Williams,  11  Ves.  3. 


§§   54-55)  NATURE    OF    PARTNER'S    INTEREST.  133 

55.  The  characteristic  features  of  an  estate  in  partnership 
are  the  following: 

(a)  The  title  of  partnership  property  is  in  all  of  the  part- 

ners jointly,  but  the  partners  are  neither 

(1)  Tenants  in  common  (p.  133), 

(I)  Because  a  sale  of  a  partner's  interest  does 
not  pass  an  undivided  interest  in  the 
property,  but  only  such  partner's  share 
of  what  remains  after  all  partnership 
debts  are  paid,  and 

(XT)  Because  a  sale  of  specific  partnership 
property  by  a  partner  passes  the  w^hole 
title,  and  not  simply  the  seller's  indi- 
vidual interest,  nor 

(2)  Joint  tenants  (p.  135), 

(I)  Because  there  is  no  beneficial  survivor- 
ship, and 

(H)  Because  one  partner  can  sell  partner- 
ship property  in  the  lifetime  of  his 
co-partners. 

(b)  A   partner's   share   simply   entitles   him   to   a  given 

proportion  of  w^hat  remains  after  all  the  firm  debts 
have  been  paid  (p.  137). 

(c)  A  partner   is   not  entitled   to  a  partition  or  division 

of  the  property  in  kind  (p.  137). 

There  has  been  always  a  question  as  to  the  nature  of  partner- 
ship property;  that  is,  whether  this  property  is  an  estate  in  com- 
mon or  one  in  joint  tenancy,  inasmuch  as  it  is  characterized  by 
features  found  in  both.  It  is  held  by  all  the  partners,  and  since  it 
is  the  substantial  effect  of  individual  contributions  of  money  or 
service,  as  the  case  may  be,  it  is  difficult  to  understand  at  first  that 
the  individuals  do  not  own  it  each  in  the  ratio  of  his  separate  in- 
terest in  the  business. 

Part/ners  are  not  Tenants  in  Common  of  the  Firm,  Property. 

It  might  appear  that  here  is  unity  of  possession,  and  since,  after 
the  partnership  shall  have  been  dissolved,  each  will  be  restored  his 
proportion  again,  instead  of  all  the  property  going  into  the  estate 


134  CHARACTERISTIC   FEATURES    OF    PARTNERSHIPS.  (Cll.   3 

of  the  survivor,  and  since  any  one  of  the  partners  may  convey  his 
share  to  a  stranger  meantime,  there  seems  to  be  an  absence  of  that 
survivorship  without  which  there  can  be  no  estate  in  joint  tenancy. 
But,  while  the  property  thus  is  held  by  all  the  partners,  it  is  held 
by  them  as  members  of  their  firm;  and,  just  as  has  been  said  of 
the  partnership  capital,  so  it  is  to  be  said  of  partnership  property 
generally,  that  a  partner  docs  not  own  any  part  of  it/^^  Partners  are 
not  tenants  in  common.  For  while  a  partner  may,  as  was  said  above, 
convey  his  share  to  a  stranger,  the  stranger  will  take  nothing  what- 
soever by  the  conveyance  until  after  a  dissolution  of  the  partner- 
ship, and  a  settlement  with  the  partnership  creditors,  to  whom  he 
is  postponed."*  Even  if  a  personal  judgment  is  recovered  against 
a  partner  for  a  private  debt,  and  execution  follows  the  judgment, 
a  levy  on  the  partner's  share  will  affect  notliing  but  what  it  may 
afterwards  appear  that  the  partner  is  entitltKi  to;  that  is,  after  the 
dissolution  of  the  partnership,  the  payment  of  all  the  firm  cred 
itors,  and  a  determination  of  the  share  of  the  partner  in  the  property 
that  remains.^"  For  that  is  the  significance  of  the  word  "share," 
as  used  in  such  a  connection;  it  having  been  well  defined  as  "the 
value  of  his  [partner's]  original  contribution,  increased  or  dimin 
ished  by  his  share  of  profit  or  loss."»»°  But  then  the  effect  of  a 
sale  of  property  by  an  individual  is  very  diderent  where  the  indi- 
vidual was  a  tenant  in  common  with  the  person  interested  with  him 
in  the  ownership  of  the  property  from  what  it  is  where  he  was  his 
partner  in  it.  Thus,  in  the  case  of  Person  v.  Wilson  '"  there  was  a 
question  whether  a  partnership  or  a  tenancy  in  common  subsisted 
between  certain  indinduals,  because,  all  the  property  having  been 

127  Lirnll.  Partn.  p.  339;  Bank  v.  Carrollton  Railroad,  11  Wall.  624;  U.  S.  v. 
Hack,  8  Pet.  271;  Lingen  v.  Simpson,  1  Sim.  &  S.  GOO;  Cockle  v.  Whiting.  Tam.  55. 

128  Menagh  v.  Whitwell,  52  N.  Y.  1-lG;  Durborrow's  Appeal,  84  Pa.  St.  404; 
Collins'  Appeal,  107  Pa.  St.  590;  Whigham's  Appeal,  63  Pa.  St  194;  Sindelare  v. 
Walker,  137  111.  43,  27  N.  E.  59;  Carrie  v.  Commercial  Co.,  90  Cal.  84,  27  Pac. 
68.  But  such  purchaser  takes  whatever  would  have  been  due  his  vendor  in  pref- 
erence to  the  latter's  unsecured  creditors.  Thompson  v.  Spittle,  102  Mass.  207. 
The  vendee  acquires  merely  a  jus  in  personam,  and  not  a  jus  in  rem.  Bates, 
Partn.  §  183.  He  does  not  become  a  tenant  in  common.  Donaldson  v.  Bank,  1 
Dev.  Eq.  (N.  C.)  103;  Bank  v.  Carrollton  Railroad,  11  Wall.  624. 

120  Reinheimer  v.  Hemingway,  35  Pa.   St.   432;   Sanborn  v.  Royce,   132  Mass. 
594;  Bank  v,  Carrollton  Railroad,  11  Wall.  624.     See  post,  p.   141. 
130  Indian  Contract  Act.    See  Pol.  l*artn.  art.  33. 
i«i  25  Minn.  189,  194. 


.^§  54-55)         NATURE  OF  PARTNER'S  INTEREST.  135 

sold  bj  one  of  them,  the  sale  would,  on  the  latter  hypothesis,  have 
cariiod  only  the  seller's  individual  interest.'"  In  another  case  the 
rights  of  a  purchaser  from  a  member  of  a  defunct  partnership  of  a 
judgment  in  favor  of  the  latter,  which  judgment  had  been  previously 
sold  by  the  firm's  assignee  to  a  person  secretly  representing  the  part- 
ners, was  sustained  on  the  ground  that  the  sale  to  the  successful 
party  had  been  made  by  a  partner,  and  not  a  tenant  in  common; '" 
not,  of  course,  a  partner  as  of  the  old  firm,  but  in  respect  of  the 
transaction  of  buying  and  selling  the  judgment. 

Partners  are  not  Joint  Tenants  of  the  Firm  Property. 

Close  examination  into  the  question  results  in  little  that  is  more 
substantial  where  the  claim  is  made  that  tirm  property  is  held  in 
joint  tenancy.  To  be  sure,  so  far  as  concerns  the  existence  of  some 
sort  of  survivorshii),  this  claim  has  a  semblance  of  a  basis;  for, 
if  the  partner  dies,  the  whole  property  goes  to  the  surviving  co- 
partner, instead  of  going  proportionably  to  the  executor  of  the 
deceased.'"  It  has  been  said  that,  just  as  a  pledgee  or  mortgagee 
has  a  right  to  hold  the  property  in  his  lumds  until  the  debt  due 
him  is  paid,  so  a  surviving  partner  may  hold  partnership  property 
imtil  the  debts  of  the  tirm  are  paid,  whether  such  debts  run  to 
general  finu  creditors  or  to  himself,  and  that  the  statute  of  limi- 
tations will  not  run  against  him,  so  as  to  render  his  hold  upon  the 
assets  the  less  valid  until  such  debts  are  paid.'"  The  surviving  co- 
paitner  has  the  closing  up  of  the  partnership  affairs,  the  reduction 
of  its  property  into  cash  for  the  payment  of  the  firm  debts,  and  the 
actual  payment  of  these  debts, '="  without  the  executor  having  the 
right  to  interfei-e,  except,  of  course,  that  he  has  access  to  the  courts 
to  compel  this  surviving  partner  to  proceed  to  close  up  the  busi- 
ness,'" and  to  have  his  proceedings  scrutinized  to  the  end  that  the 
estate  be  not  made  to  suffer  through  any  fraud  of  his.'^®  And  it 
is  necessary  at  times  for  the  executor  thus  to  have  the  survivor 

"2  Mersereau  ▼.  Norton.  15  Johns.  (N.  Y.)  180;  Thompeon  t.  Bowman,  0  Wall. 
316. 
13  3  Thursby  v.  Lidgerwood,  69  N.  Y.  198. 

134  Se*  poet,  p.  410. 

135  Clay  V.  Freeman,  118  U.  S.  97,  6  Sup.  Ct.  964. 

130  See  post,  p.  410;    also,  Buckley  v.  Barber,  G  Eich.  164- 
»«T  Clay  V.  Freeman,  118  U.  S.  97,  6  Sup.  Ct.  904. 
18  9  Knox  V.  Gye,  L.  R.  5  H.  Ij.  656. 


13b  CHARACTERISTIC   FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

compelled  to  proceed  to  close  op  the  firm's  affairs;  for  the  stand- 
ing idly  by  of  those  interested  in  the  estate  of  the  deceased  part- 
ner, while  the  survivor  continues  the  business,  using  the  property 
of  the  partnership  as  before,  must  result  in  the  subordination  of  the 
rights  of  the  estate  in  the  assets  to  those  of  subsequent  creditors  of 
the  firm.^*°  But  this  is  the  extent  of  the  right  to  interfere,  and, 
while  the  whole  property  does  not  become  part  of  the  permanent 
estate  of  this  survivor,  the  latter  can,  by  his  disposition  of  it  in 
aid  of  such  settlement,  bind  the  executor  and  the  heirs  and  devisees 
of  the  deceased  partner  so  that  they  may  be  compelled  subsequently, 
in  a  court  of  equity,  to  give  effect  to  such  a  disposition  so  far  as 
they  may  be  able  to  do  so.^*^  This  is  all  that  the  survivorship 
really  amounts  to  in  connection  with  partnershii)  property;  for, 
after  paying  all  the  firm  debts,  the  survivor's  right  to  the  corpus 
of  that  property  ends.  He  has  his  share,  and  the  executor  or  other 
representative  of  the  deceased  has  the  share  of  the  latter  after  the 
settlement  of  the  firm's  affairs  is  done.^*'  Thus,  the  tenancy  can 
be  no  more  properly  called  "joint"  than  "in  common."  It  has,  it  is 
true,  been  said  that  this  holding  by  the  survivor  is  not  that  of  a 
trustee;^**  but  it  has  not  ever  been  claimed  that  it  is  beneficial 
to  himself,  although  in  ITolbrook  v.  Lackey***  a  firm  debtor  sued 
by  such  survivor  was  allowed  to  set  off  the  latter's  private  indebt- 
edness. However,  in  a  situation  like  the  last  the  survivor  would 
be  required  to  account  for  this  in  his  settlement,  so  that  here  is  no 
attempt  to  give  to  the  holding  a  beneficial  character.  Pollock  de- 
scribes partners,  with  reference  to  their  title  gMierally  to  partner- 
ship property,  as  "owners  in  common  or  joint  owners  without  bene- 
fit of  survivorship,"  **°  as  if  it  is  not  necessary  to  be  specific  in  the 
mattei"  at  all;  and  it  has  elsewhere  been  said  that,  although  it  is 
essential  to  a  partnership  that  there  be  a  community  of  interest  in 
the  substance  of  it,  "this  community  of  interest  must  not  be  that 
of  mere  joint  tenants  or  tenants  in  common."  ^*"    The  title  of  part- 

1*0  Hoyt  V.  Sprague,  103  U.  S.  G13. 

1*1  Shanks  v.  Klein,  104  U.  S.  18. 

1*2  Crosw.  Ex'rs  &  Adm'rs,  p.  240. 

1*8  Knox  ▼.  Gye,  L,  R.  5  H.  L.  656.    But  see  Jones  t.  Dexter,  130  Mass.  380 

1**  13  Mete.  (Mass.)  132. 

14  0  rol.  Partn.  c.  6,  art.  27. 

1*8  Donnell  v.  Harshe,  67  Mo.  172.     See  Lindl.  Partn.  p.  332. 


§§   54-55)  N ATI' RE    OF    partner's    INTEREST.  137 

uers  to  firm  property  can  best  be  said  merely  to  bear  an  analogy 
to  these  two  sx>ecies  of  tenancy  in  respect  of  dififerent  features  of 
each  of  them.  For  partnership  property,  as  we  have  seen,  is  (the- 
oretically, at  least)  always  of  a  personal  nature,  which  the  signif- 
icance of  the  old  feudal  tenancies  does  not  properly  touch.  Besides 
this,  the  fact  being  that  one  partner  can  sell  all  the  firm  assets,  and 
that,  too,  in  the  lifetime  of  his  co-p-artner,^*^  it  is  plain  that  the  law 
of  neither  tenancy  controls  either  the  relation  or  its  property.^** 

Share  a  Might  to  Money. 

What  is  meant  by  the  "share"  of  a  partner  is  his  proportion  of 
the  partnership  assets  after  they  have  been  all  realized  and  con 
verted  into  money,  and  all  the  debts  and  liabilities  have  been  paid 
and  discharged.^**  When  a  partnership  is  dissolved  or  terminated, 
any  one  of  the  partners  is  entitled  to  have  the  whole  assets  sold  and 
the  proceeds  applied  to  the  payment  of  partnership  debts,  and  what- 
ever then  remains  is  to  be  divided  among  the  partners  in  propor- 
tion to  their  several  shares.  No  partner  is  entitled  to  a  partition 
of  the  property  in  kind,  whether  the  property  is  real  or  personal."" 

KT  See  post,  p.  234. 

H8  'The  legal  title  of  real  estate,  if  In  the  name  of  more  than  one  partner,  is 
always  held  by  them  as  tenants  in  common;  but,  in  equity,  it  may  be  partnership 
property."     Bates,  Partn.  §  280. 

14B  "The  interest  of  a  member  of  such  a  firm  in  the  assets  of  it  is  the  share 
to  which  he  is  entitled  by  the  terms  of  the  co-partnership,  in  the  surplus  of  those 
assets  remaining  after  all  partnership  debts  are  fully  paid.  It  appears  in  this  case 
that  firm  was  insolvent;  that  its  debts  much  exceeded  its  assets;  that  there  never 
could  arise  a  surplus.  So  the  interest  of  Stockbridge,  as  an  individual,  in  this 
property,  was  nothing;  and  so  the  plaintiff  got  nothing  for  his  purchase."  Staats 
V.  Briatow,  73  N.  Y.  2G4,  207.  As  to  the  nature  of  a  partner's  interest,  see,  also. 
Menagh  v.  Whitwell,  52  N.  Y.  146;  Hiscock  v.  Phelps,  49  N.  Y.  97;  Sindelare 
V.  Walker,  137  111.  43,  27  N.  E.  59;  Trowbridge  v.  Cross,  117  111.  109,  7  N.  E. 
347;  Fourth  Nat.  Bank  v.  Railroad  Co.,  11  Wall.  624;  Filley  v.  Phelps,  18  Conn. 
294;  Douglas  v.  Winslow,  20  Me.  89.  A  partner's  share  is  a  right  to  money. 
Lindl.  Partn.  p.  339.  A  partner  can  compel  a  sale  and  a  division  of  the  pro- 
ceeds, but  not  a  partition  of  the  partnership  property.  Wild  v.  Milne,  26  Beav. 
504.  A  partner's  interest  is  a  chose  in  action.  Ames,  Cas.  Partn.  163.  A  part- 
ner's claim  for  an  accounting  after  a  dissolution  must  be  brought  within  the  period 
prescribed  by  the  statute  of  limitations,  or  it  will  be  barred.  Knox  v.  Gye,  L.  R. 
5  H.  L.  650,  approved  in  Taylor  v.  Taylor,  28  Law  T.  189.  See,  also,  Coudrey  v. 
Gilliam,  60  Mo.  86;  Massey  v.  Tingle,  29  Mo.  437;  Manchester  v.  Mathewson, 
3  R.  I.  237;    Pierce  v.  McClollan,  93  111.  245;    Strange  v.  Graham,  56  Ala.  614. 

iBo  Wild  v,  Milne,  26  Bear.  504. 


138  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 


SAME— AMOUNT  OF  EACH  PARTNER'S  SHARE. 

56.  The  amount  of  each  partner's  share  in  the  partnership 
property  depends  upon  the  agreement  into  which 
the  partners  have  entered. 

67.  In  the  absence  of  evidence  showing  a  contrary  inten- 
tion, the  shares  of  all  the  partners  are  presumed  to 
be  equal. 

The  proportions  in  which  the  members  of  a  firm  are  entitled  to 
the  property  of  the  firm,  or,  in  other  words,  the  amount  of  each 
partner's  share  in  a  partnership,  depends  upon  the  agreement  into 
which  the  partners  have  entered. 

Shares  are  PHraa  Facie  Equal. 

In  the  event  of  a  dispute  between  the  partners  as  to  the  amount 
of  their  shares,  such  dispute,  if  it  does  not  turn  on  the  construc- 
tion of  written  documents,  must  be  decided  like  any  other  pure 
question  of  fact;  ^^^  and,  if  there  is  no  evidence  from  which  any  sat- 
isfactory conclusion  as  to  what  was  agreed  can  be  drawn,***  the 
shares  of  all  the  partners  will  be  adjudged  equal.*" 

"This  rule,  no  doubt,  occasionally  leads  to  apparent  injustice; 
but  it  is  not  easy  to  lay  down  any  other  rule  which,  under  the  cir 
cum  stances  supposed,  could  be  fairly  applied.  It  is  sometimes  sug- 
gested that  the  shares  of  partners  ought  to  be  proportionate  to  their 
contributions;  but,  without  in  any  way  denying  this,  it  may  be 
asked,  how  is  the  value  of  each  partner's  contribution  to  be  meas- 
ured? Certainly  not  merely  by  the  capital  he  may  have  brought 
into  the  firm.  His  skill,  his  connection,  his  command  of  the  con- 
fidence and  respect  of  others,  must  all  be  taken  into  account;  and, 
if  it  is  impossible  to  set  a  money  value  on  each  partner's  contribu- 

iBi  See  Peacock  v.  Peacock,  16  Ves.  49;  McGregor  v.  Bainbridge,  7  Hare,  164; 
Binford  v.  Dommett,  4  Ves.  756. 

152  Stewart  v.  Forbes,  1  Macn.  &  G.  137;  Webster  v.  Bray,  7  Hare,  159;  Cop- 
land V.  Toulmin,  7  Clark  &  F.  349. 

163  Robinson  v.  Anderson,  20  Beav.  98,  7  De  Gex,  M.  &  G.  239;  Peacock  v. 
Peacock,  16  Ves.  49;  Webster  v.  Bray,  7  Hare,  159;  Farrar  v,  Beswick,  1  Moody 
&  R.  527;  Henry  v,  Bassett,  75  Mo.  89;  Whitcomb  v.  Converse,  119  Mass.  38; 
Ligare  v.  Peacock,  109  111.  94;  Griggs  v.  Clark,  23  Cal.  427;  Kilpatrick  v. 
Mackay,  4  Vict.  Law  R.  28. 


§§   56-57)  AMOUNT    OF    EACH    PARTJS^ER's    SHARE.  139 

tion  in  this  respect,  it  is  obviously  impossible  to  determine  in  the 
manner  suggested  the  shares  of  the  partners  in  the  partnership. 
Xor  can  it  be  said  to  be  unreasonable  to  infer,  in  the  absence  of 
all  evidence  to  the  contrary,  that  the  partners  themselves  have 
agreed  to  consider  their  contributions  as  of  equal  value,  although 
they  may  have  brought  in  unequal  sums  of  money,  or  be  themselves 
unequal  as  regards  skill,  connection,  or  character.  "Whether,  there- 
fore, partners  have  contributed  money  equally  or  unequally,  wheth- 
er they  are  or  are  not  on  a  par  as  regards  skill,  connection,  or 
character,  whether  they  have  or  have  not  labored  equally  for  the 
benefit  of  the  firm,  their  shares  will  be  considered  as  equal,  un 
less  some  agreement  to  the  contrary  can  be  shown  to  have  been 
entered  into."  ^^* 

Meaning  of '  ''Eq  uality.  * ' 

When  it  is  said  that  the  shares  of  pai-tners  are  prima  facie  equal, 
although  their  capitals  are  unequal,  what  is  meant  is  that  losses  of 
capital,  like  other  losses,  must  be  shared  equally;  but  it  is  not 
meant  that,  on  a  final  settlement  of  accounts,  capitals  contributed 
unequally  are  to  be  treated  as  one  aggregate  fund,  which  ought  to 
be  divided  between  the  partners  in  equal  shares."^  On  the  con- 
trary, if  an  intention  not  to  consider  the  contributions  as  equal  is 
shown,  the  contribution  of  each  partner  must  be  returned  to  him 
before  any  division  takes  place.^''®  Whatever  remains  represents 
profits,  and  is  to  be  equally  divided,  unless  an  agreement  to  share 
in  some  other  proportion  is  shown/ ^^     If,  instead  of  profits  being 

154  Lindl.  Partn.  p.  349.  See,  also,  Roach  v.  Perry,  16  111.  37;  Farr  v.  John- 
son, 25  111.  522;  Taft  v.  Schwamb,  80  111.  289;  Ligare  v.  Peacock,  109  111.  94; 
Northrup  v.  McGill,  27  Mich.  234;  Gould  v.  Gould,  6  Wend.  (N.  Y.)  2G3;  Ryder 
V.  Gilbert,  16  Hun  (N.  Y.)  163;  Ratzer  v.  Ratzer,  28  N.  J.  Eq.  13G;  Henry  v. 
Bassett,  75  Mo.  89.  -But  see  Peacock  v.  Peacock,  2  Camp.  45,  and  Sharpe  v. 
Cummings,  2  Dowl.  &,  L.  504,  where  it  was  held  to  be  for  the  jury  to  say  what 
shares  the  partners  were  reasonably  entitled  to.  Lindley  says  (Partn.  p.  349,  note 
k)  that  these  cases  cannot  be  supported. 

16B  Lindl.  Partn.  p.  350.  "This  doctrine  must  be  kept  distinct  from  divisions  of 
capital  and  repayment  of  capital  on  winding  up.  It  relates  only  to  dividing  profit 
and  loss,  but  does  not  alter  the  treatment  of  capital,  as  if  a  debt,  to  be  first  paid 
before  profits  are  divided,  and,  in  case  of  impairment,  be  repaid  less  the  equaliza- 
tion of  losses."      Bates,  Partn.  §  181. 

i6«  See  ante,  p.  114,  and  cases  cited.  is^  See  cases  cited  in  note  154,  supra. 


140  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Cll.    3 

realized,  a  loss  is  incurred,  so  that  the  capital  is  impaired,  prima 
facie  the  loss  is  to  be  equally,  and  not  proportionally,  bome.^"* 

Evidence  Showing  Inequality. 

An  agreement  for  inequality  may  be  conclusively  inferred  from 
the  mode  in  which  the  partners  have  dealt  with  each  other,  and 
from  the  contents  of  the  partnership  books.^**®  Moreover,  if  an 
agreement  for  inequality  clearly  at  one  time  existed,  no  presumption 
of  any  alteration  in  this  respect  will  arise  from  the  mere  fact  that 
some  of  the  original  members  have  retired.  In  the  absence  of  evi- 
dence to  the  contrary,  the  inference  is  that  the  shares  of  the  retir- 
ing members  have  been  taken  by  the  continuing  parties  in  the  pro- 
portions in  which  these  last  were  originally  interested  in  the  con- 
cern.^'" 

Rule  as  to  Presumptive  Equality  Applies  to  Partnerships  in  SingU 

Transactions. 

The  rule  that  the  shares  of  partners  are  equal,  unless  they  have 
otherwise  agreed,  applies  not  only  to  persons  who  are  partners  in 
business  generally,  but  also  to  those  who  are  partners  as  regards 
one  single  matter  only.^*^  Thus,  in  Robinson  v.  Anderson,^""  where 
two  solicitors,  not  in  partnership,  were  jointly  retained  to  defend 
certain  actions,  and  there  was  no  satisfactory  evidence  to  show  in 
what  proportions  they  were  to  divide  their  remuneration,  it  was 
held  that  they  were  entitled  to  share  it  equally,  although  they  had 
been  paid  separately,  and  had  done  unequal  amounts  of  work. 

Applications  of  Rule  Where  One  Firm  Comprises  Another. 

A  question  of  some  difficulty  arises  when  a  firm,  say  of  two  part- 
ners, engages  in  a  partnership  speculation  with  a  third  person,  not 
a  member  of  that  firm.  Is  the  interest  of  such  person  in  the  spec- 
ulation to  be  treated  as  one-half,  the  other  two  persons  being  treat- 
ed as  one?    Or  is  the  interest  of  each  of  the  three  to  be  treated  as 

158  See  ante,  p.  116.  See,  also,  Flagg  v.  Stowe,  85  111.  164;  Whitcomb  v.  Con 
verse,  119  Mass.  38. 

169  Lindl.  Partn.  p.  350;  Bates,  Partn.  §  181.  See  Stewart  t.  Forbes,  1  Macn. 
&  G.  137.  See  Moore  v.  Trieber,  81  Ark.  113,  where  partners  were  held  bound 
by  a  particular  course  of  dealing, 

160  Robley  v.  Brooke,  7  Bligh  (N.  S.)  90. 

181  Webster  v.  Bray,  7  Hare,  159;  McGregor  v.  Bainbridge,  Id.  164,  note; 
Hanslip  v.  Kitton,  8  Jur.  (N.  S.)  835. 

162  20  Beav.  98. 


§   58)  SALE    OF    partner's    INTEREST    ON    EXECUTION.  141 

equal,  each  taking  one-third?  The  answer  to  these  questions  must 
depend  upon  whether  the  two  partners  entered  into  the  specula- 
tion as  a  firm,  or  as  two  individuals.  If  the  former,  there  will, 
in  substance,  be  only  two  parties  interested  in  the  speculation,  and 
the  profits  thereof  must  be  divided  into  two  equal  parts,  while,  if 
the  latter  is  the  case,  there  will  be  three  parties  interested,  and  the 
profits  must  be  divided  into  three  equal  parts.^®' 

SAME— SALE  OF  PARTNER'S  INTEREST  ON  EXECUTION. 

68.  A  partner's  interest  may  be  sold  on  execution  for  his 
private  debts.  The  purchaser  becomes  entitled  to 
receive  only  what  may  be  found  due  such  partner 
after  an  accounting  and  settlement  of  the  partner- 
ship affairs. 

But,  while  the  right  to  levy  is  thus  conceded,  the  authorities  dif- 
fer widely  as  to  the  course  to  be  pursued  by  the  creditor  and  the 
officer  executing  the  writ.  In  some  cases  the  right  of  the  officer 
to  take  the  goods,  even  temporarily,  out  of  the  immediate  posses- 
sion and  control  of  the  other  partners,  is  denied.^'*  In  others  a 
temporary  interruption  of  possession  in  order  to  take  an  inventory 
is  reluctantly  permitted.  In  still  others  it  is  held  that  the  officer 
may,  and  for  his  own  security  and  that  of  the  execution  creditor 
should,  take  possession  of  all  the  chattels  levied  on,  and,  after  the 
sale  of  the  debtor's  interest  therein,  redeliver  the  same  to  the  other 
partners  and  the  purchaser,  who  are  said  to  be  tenants  in  common 
of  the  chattels  so  sold.^^"*     IJut  it  is  well  settled  that  the  separate 

i««  Lindl.  Partn.  p.  351;  Warner  v.  Smith,  1  De  Gex,  J.  &  S.  337;  Conwell  v. 
Sandidge's  Adm'r,  5  Dana  (Ky.)  210;    Turnipseed  t.  Goodwin,  9  Ala.  372. 

164  Morrison  v.  Blodgett,  8  N.  H.  238,  and  cases  cited,  infra,  notes  169,  196,  197. 
Under  Pub.  St.  c.  151,  §  2,  cl.  11,  as  amended  by  St.  1SS4,  c.  285,  providiiig  that  in 
a  suit  in  equity  to  subject  the  interest  of  a  partner  to  the  payment  of  a  debt,  un- 
less the  debt  is  in  judgment,  the  business  of  the  partnership  shall  not  be  inter- 
fered with  "until  the  plaintiff's  debt  is  established,"  and,  if  either  co-partner  shall 
giTe  plaintiff  a  bond  for  the  amount  of  his  claim,  "the  court  shall  proceed  no  fur- 
ther therein  save  to  establish  the  debt,"  the  court,  sitting  in  equity,  may  proceed 
to  establish  the  debt  when  it  is  not  in  judgment.  Draper  t.  Hollings,  163  Mass. 
127,  39  N.  E.  793. 

18  6  Nixon  V.  Nash,  12  Ohio  St.  647.     In  execution  of  judgment  against  a  part 


142  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

creditor  or  the  purchaser  at  such  sale  acquires  only  the  beneficial 
interest  of  the  debtor  partner.^ *^  The  sale  operates  as  a  dissolu- 
tion of  the  partnership,  and  calls  for  an  accounting  and  settlement 
of  the  partnership  business.^®^ 

In  Morrison  v.  Blodgett  ^^*  it  was  held  that  partnership  property 
cannot  be  seized  under  attachment  or  execution  for  the  private  debt 
of  a  partner,  but  that  a  partner's  interest  may  be  seized  and  sold 
under  execution,  but  not  the  goods  themselves,  or  any  part  thereof. 

ner,  the  sherifif  must  seize  all.  because  the  moieties  are  undivided,  and  must  sell 
the  undivided  moiety,  and  the  vendee  will  be  tenant  in  common  with  the  other 
partner.  Hcydon  v.  Heydon,  1  Salk.  392.  Where  one  partner  becomes  bankrupt, 
his  assi^ees  are  tenants  in  common  with  the  solvent  partner  of  an  undivided 
moiety  of  the  partnership  effects,  subject  to  the  partnership  accounts.  West  v. 
Skip,  1  Ves.  Sr.  242.  "There  are  other  difficulties  attending  tliis  subject,  some  of 
which  cannot,  perhaps,  be  fully  obviated  without  legislation.  It  would  seem  that, 
Uke  bankruptcy  in  England,  such  sale  must  operate,  ipso  facto,  as  a  dissolution  of 
the  partnership.  Marquand  v.  Manufacturing  Co.,  17  Johns.  (N.  Y.)  529,  535. 
And  several  of  the  authorities  before  cited  say  that  the  purchaser  becomes  a  tenant 
in  common  with  the  other  partner,  and  takes  the  undivided  share  subject  to  the 
rights  of  the  other  partner.  Fox  v.  Hanbury,  Cowp.  449;  Gow,  Partn.  2S.5,  310, 
365,  391;  Skipp  v.  Harwoodj  2  Swanst.  Ch.  586.  If  the  purchaser  is  to  be  re- 
garded as  a  tenant  in  common  with  the  other  partner  of  the  partnership  goods, 
he  may,  perhaps,  have  the  ordinary  rights  of  such  tenant,  and  be  entitled,  like 
the  assignees  in  bankruptcy,  to  hold  such  of  the  goods  of  the  partnership  as  may 
come  to  his  hands,  subject  to  the  account.  Murray  v.  Murray,  5  Johns.  Ch.  (N. 
Y.)  70.  There  are,  however,  expressions  in  some  of  the  cases  indicating  that  such 
sale  would  give  the  purchaser  no  right  to  take  possession  of  any  of  the  goods,  but 
only  to  demand  an  account.  Dob  v.  Halsey,  16  Johns.  (N.  Y.)  34,  39;  Nicoll  v. 
Mumford,  4  Johns.  Ch.  (N.  Y.)  525;  Church  v.  Knox,  2  Conn.  517.  And  per- 
haps the  same  duties  do  not  devolve  on  him  as  upon  an  assignee,  or  the  same  rights 
accrue  to  him."      Morrison  v.  Blodgett,  8  N.  H.  238,  253. 

166  See  cases  cited  infra.  Generally,  as  to  position  of  purchasers  under  execu- 
tion against  partner,  see,  also,  Rainey  v.  Nance,  54  111.  29;  Ross  v.  Henderson, 
77  N.  C.  170;  Tredwell  v.  Rascoe,  14  N.  C.  50;  Price  v.  Hunt,  33  N.  G.  42; 
Latham  v.  Simmons,  48  N.  C.  27;  McCutchon  v.  Davis  (Tex.  Sup.)  8  S.  W. 
123;  Clagett  v.  Kilbourne,  1  Black,  346;  Osborn  v.  McBride,  3  Sawy.  590,  Fed. 
Gas.  No.  10,593;  Polk  v.  Gallant,  22  N.  C.  395;  Buck  v.  Winn,  11  B.  Moo. 
(Ky.)  320;  Crow  v.  Drace,  61  Mo.  225;  Black  v.  Long,  60  Mo.  181;  Cowden 
T.  Cairns,  28  Mo.  471.  Private  creditors  by  attachment  acquire  only  the  interest 
left  after  the  satisfaction  of  the  firm  debts.  Wright  t.  Radcliffe,  1  Mo.  App.  Rep'r, 
389. 

167  Lindl.  Partn.  p.  358.    See  post,  p.  390. 
188  8  N.  H.  238. 


§   58)  SALE    OF    partner's    INTEREST    ON    EXECUTION.  143 

On  principle  this  seems  to  be  the  correct  view.^'®     We  quote  from 
the  able  and  elaborate  opinion  of  Pai-ker,  J. : 

"Formerly  it  was,  undoubtedly,  the  practice  to  levy  an  execution 
against  one  of  several  partners  upon  all   or  a  part  of  the  goods 

169  The  following  cases  support  the  view  that,  on  an  execution  against  one  part- 
ner, the  sheriff  cannot  seize  and  take  into  ills  exclusive  possession  specific  articles 
belonging  to  the  firm,  but,  at  most,  can  only  seize  the  interest  of  the  partner,  what- 
-ver  it  may  be,  as  determined  by  a  final  accounting.  Knerr  v.  Hoffman,  05  Pa. 
St.  126;  Vandike  v.  Rosskam,  67  Pa.  St.  330;  Sirrine  v.  Briggs,  31  Mich.  443; 
Haynes  v.  Knowles,  36  Mich.  407;  Hutchinson  v.  Dubois,  45  Mich.  143,  7  N. 
W.  714;  Whigham's  Appeal,  63  Pa.  St.  194;  Daniel  v.  Owens,  70  Ala.  297; 
Cropper  v.  Coburn,  2  Curt.  465,  Fed.  Cas.  No.  3,416;  Sanborn  v.  Royce,  132  Mass. 
594;  Fay  v.  Duggan,  135  Mass.  242;  Gibson  v.  Stevens.  7  N.  H.  352;  Page  v. 
Carpenter,  10  N.  H.  77;  Jarvis  v.  Hyer,  4  Dev.  (N.  C.)  367;  Deal  v.  Bogue,  20 
Pa.  St.  228;  Richards  v.  Haines,  30  Iowa,  574.  And  see  Brande  v.  Bond,  63  Wis. 
140,  23  N.  W.  101.  The  great  weight  of  the  early  authorities,  however,  is  op- 
ix)sed  to  this  view;  and  even  some  recent  cases  recognize  the  right  of  the  sheriff  to 
assume  exclusive  possession  of  the  partnership  property  and  retain  it  until  the  sale. 
See  Heydon  v.  Heydon,  1  Salk.  392;  Johnson  v.  Evans,  7  Man.  &  G.  240;  Mayhew 
V.  Herrick,  7  C.  B.  229;  U.  S.  v.  Williams,  4  McLean,  236,  Fed.  Cas.  No.  16,719; 
White  V.  Jones,  38  III.  159;  Newhall  v.  Buckingham,  14  111.  405;  Smith  v.  Or- 
ser,  42  N.  Y.  132;  Eighth  Nat.  Bank  v.  Fitch,  49  N.  Y.  541;  Atkins  v.  Saxton. 
77  N.  Y.  195;  Fogg  v.  Lawry,  68  Me.  78;  Sanders  v.  Young,  31  Miss.  Ill; 
Scrugham  v.  Carter,  12  Wend.  (N.  Y.)  131;  Randall  v,  Johnson,  13  R.  I.  338; 
Latham  v.  Simmons,  3  Jones  (N.  C.)  27;  Watson  v.  Gabby,  18  B.  Mon.  (Ky.)  658; 
Reed  v.  Shepardson,  2  Vt.  120;  Russ  v.  Fay,  29  Vt.  381;  Branch  v.  Wiseman, 
51  Ind.  1;  Clark  v.  Gushing,  52  Cal.  017;  Stevens  v.  Stevens,  39  Conn.  474. 
But  he  must  sell  all,  not  a  part.  Stuniph  v.  Bauer,  76  Ind.  157.  The  interest  of 
a  limited  partner  cannot  be  seized  and  sold  by  the  sheriff,  in  New  York.  Harris 
V.  Murray,  28  N.  Y.  574.  A  valid  lien,  as  against  a  debtor  who  is  a  member 
of  a  partnership,  may  be  acquired  by  attaching  all  his  interest  in  the  effects  of  the 
firm,  and  summoning  the  other  partners  as  trustees;  and  such  lien  may  be  pre- 
served by  notice  to  the  parties  concerned,  and  such  other  acts  designed  to  give 
notoriety  to  the  attachment  as  the  nature  of  the  property  will  admit,  although  pos- 
session cannot  be  taken,  and  the  property  removed,  to  the  exclusion  of  the  other 
partners.  Such  lien  is  not  acquired,  so  as  to  support  a  bill  against  the  firm  for 
an  account,  by  merely  summoning  the  other  partners  as  trustees.  Treadwell  v. 
Brown,  43  N.  H.  290.  In  Burnell  v.  Hnnt,  5  Jur.  650,  Patteson,  J.,  said:  "The 
proper  course  is  for  the  sheriff  to  seize  the  whole,  and  to  sell  the  share  of  the 
execution  partner,  and  the  vendee  will  have  to  settle  the  matter  in  chancery.  The 
sheriff  has  no  power  to  take  the  property  out  of  the  hands  of  the  other  partner." 
In  Smith  v.  Orser,  42  N.  Y.  132,  it  was  said  that  the  sheriff,  under  attachments 
against  two  members  of  a  partnership  consisting  of  three  members,  takes  and  holds 
possession  of  the  partnership  property,  although  at  the  execution  sale  he  sells  only 
the  interest  of  the  partner  against  whom  the  execution  is  issued.      Affirming  Wad- 


l44  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Cb.   3 

which  belonged  to  the  partnership.  Various  cases  are  found,  show- 
ing the  practice  at  law  to  seize  the  specific  property  and  sell  a 
moiety  or  undivided  share  of  it.^^°  The  language  of  some  of  these 
cases  would  indicate  that  the  undivided  share  of  the  debtor  part- 
ner in  the  goods  seized  was  sold,  without  any  reference  to  the  debts 
of  the  partnership,  although  Lord  Hardwicke  understood  the  cases 
in  Salkeld  and  Lord  Raymond  as  holding  'that  judgment  and  exe- 
cution against  one  partner,  for  his  separate  debt,  does  not  put  the 
other  in  a  worse  condition,  for  he  must  have  all  the  allowances 
made  him  before  the  judgment  creditor  can  have  the  share  of 
the  other  applied  to  him.'  ^^^  Cases  have  certainly  existed  in  which 
a  partnership  was  treated  at  law  as  a  tenancy  in  common,  without 
reference  to  a  partnership  account,  so  far  as  it  respected  such  sei- 
zure and  sale,  and  as  a  tenancy  in  common  of  each  chattel  which 
belonged  to  the  partnership;  for  in  many  instances  only  a  part 
of  the  goods  have  been  seized,  and  the  undivided  share  in  separate 
articles  has  been  sold  to  different  individuals."'     Some  of  the  early 

dell  T.  Cook,  2  Hill  (N.  Y.)  48.  In  Johnson  v.  Evnns,  7  Man.  &  G,  240,  it  was 
said  that  it  is  an  admitted  general  rule  of  law  that  the  judgment  creditor  of  any 
partner  may  take  in  execution  against  that  partner  as  well  his  separate  property 
as  his  share  or  interest  In  all  the  personal  property  of  the  partnership  that  is 
tangible  and  capable  of  bfing  seized;  and  it  is  undoubtedly  true  that  in  order  to 
make,  and  for  the  purpose  of  making,  the  execution  effectual  against  the  share 
of  the  debtor  partner  in  the  joint  property,  the  sheriff  must  seize  the  whole,  the 
shares  of  the  two  partners  being  undivided.  It  has  sometimes  been  held  that  a 
partner's  interest  may  be  reached  by  garnishment  of  his  co-partners.  But,  as  this 
involves  an  accounting  at  law  between  partners,  it  would  seem  to  be  improper, 
in  the  absence  of  statutory  authority.  See  Bates,  Partn.  §  1113;  Rood,  Garnish. 
S  loG  et  seq.  Code  Ga.  1882,  §  1919,  prohibits  the  sale  of  a  partner's  interest  in 
execution  under  the  common-law  proceeding,  and  provides  that  the  interest  of  a 
partner  In  the  partnership  assets  may  be  reached  by  garnishment.  Willis  v.  Hen- 
derson, 43  Ga.  325.  An  execution  creditor  of  one  member  of  a  partnership  is  not 
entitled  to  judgment  in  a  garnishment  proceeding  against  a  debtor  to  such  partner- 
ship. Johnson  t.  King,  6  Humph.  (Tenn.)  233.  And  see  Tobey  ▼.  McFarlin,  115 
Mass.  08. 

170  Heydon  t.  Heydon,  1  Salk.  392;  Jacky  t.  Butler,  2  Ld.  Raym.  871: 
Bachurst  t.  Clinkard,  1  Show.  173;  Marriott  v.  Shaw,  Comyn,  277;  King  v. 
Manning,  Id.  619;  Parker  r.  Pistor,  3  Bos.  &  P.  288;  Chapnaan  t.  Koops,  Id. 
289;  M'orley  v.  Strombom,  Id.  254;  Barker  v.  Goodair,  11  Ves.  85;  Lyndon  t. 
Gorham  and  Trustee,  1  Gall.  368,  Fed.  Cas.  No.  8,640. 

iTi  West  v.  Skip,  1  Ves.  Sr.  239,  242. 

172  Dutton  V.  Morrison,  17  Ves.  205;  Waters  v.  Taylor,  2  Ves.  &  B.  301.  "Be- 
fore the  time  of  Lord  Mansfield  it  seems  that  the  slieiiff  was  in  the  habit  of  act' 


§   58)  8AL£   OF    partner's    INTEREST   ON    EXECUTION.  145 

cases  speak  of  a  seizure  of  all  the  goods  of  the  partnership,  but 
this,  evidently,  has  not  been  regarded  as  necessary  to  the  validity 
of  the  proceeding.^^'  Probably  no  more  was  intended  than  that 
the  sheriff  could  not  divide  off  and  seize  a  moiety  of  the  goods,  and 
sell  all  which  he  seized.^^*  Although  it  seems  that  in  Eddie  v. 
Davidson  ^^^  the  whole  interest  in  the  goods  seized  was  sold,  and 
the  sheriff  was  ordered  to  pay  a  share  of  the  money  levied  to  the 
assignees  of  the  other  partner.  Comyns  says:  If  A.,  B.,  and  C. 
are  partners,  and  judgment  and  execution  is  sued  against  A.,  only 
his  share  of  the  goods  can  be  sold.  It  is  true,  the  slu'iiff  nmy  seize 
the  whole,  because  the  share  of  each,  being  undivided,  cannot  be 
kuuwn;  and,  if  he  seize  more  than  a  third  part,  he  can  only  sell 
a  third  of  what  is  seized,  for  B.  and  C.  have  an  equal  interest  with 
A.  in  the  goods  seized;  but  the  sheriff  can  only  sell  the  part  of 
him  against  whom  judgment  and  execution  was  sued.'  "*  Proceed- 
ings at  law  would  have  been  more  simple,  and  conducted  more  easily, 
had  this  practice  been  continued;  but  when  the  courts  of  equity 
adopted  the  position  that  the  partnership  property  was  a  fund, 
in  the  first  instance,  for  the  payment  of  the  partnership  debts,  that 
the  interest  of  each  partner  in  the  partnership  was  only  his  share 

ing  upon  the  snpposition  that  each  partoer  was  entitled  to  an  undivided  share  of 
every  article  belonging  to  the  firm,  without  reference  to  the  state  of  the  partner- 
ship accounts;  and,  in  executing  a  fi.  fa.  against  a  partner  for  his  separate  debt, 
the  sherifif  seized  the  whole  of  the  partnership  effects,  or  of  so  many  of  them  as 
were  requisite,  and  sold  the  undivided  share  of  the  judgment  debtor  therein." 
Lindl.  Partn.  p.  35G.  See  Hcydon  v.  Heydon,  1  Salk.  3U2;  .Tacky  v.  Butler,  2 
Ld.  Raym.  871;  Bachui«t  v.  Clinkard,  1  Show.  lOt);  Pope  v.  Uaman,  Comb.  217, 
Marriott  v.  Shaw,  Comyns,  277;  Dutton  t.  Morrison,  17  Ves.  205;  In  re  Wait, 
1  Jac.  &  W.  G08. 

ITS  A  levy  on  specific  chattels,  less  than  the  whole,  was  permitted  in  the  follow- 
ing cases:  Fogg  t.  Lawry,  68  Me.  78;  Phillips  v.  Cook,  24  Wend.  (N.  Y.)  389; 
Uhler  V.  Semple,  20  N.  J.  Eq.  288;  Hershfield  v.  Claflin,  25  Kan.  106;  Wiles  v. 
Maddox,  26  Mo.  77;  Carillon  v.  Thomas,  6  Mo.  App.  574;  Randall  v.  Johnson, 
13  R.  I.  338.     See,  also,  Nixon  t.  Nash,  12  Ohio  St.  647. 

IT 4  Smith  V.  Stokes,  1  East,  367.  The  sheriff  cannot  sell  more  than  the 
debtor's  interest  in  the  goods  seized.  Should  he  undertake  to  sell  the  entire  prop- 
erty, his  act  would  be  void,  and  he  would  be  a  trespasser  ab  initio.  Atkins  v.  Sax- 
ton,  77  N.  Y.  195.  See,  also,  Mayhew  v.  Herrick,  7  C.  B.  229;  Ford  v.  Smith, 
27  Wis.  261;  Randall  v.  Johnson,  13  R.  I.  338;  Daniel  v.  Owens,  70  Ala.  297; 
Moore  v.  Pennell.  .52  Me.  162;  Walsh  v.  Adams,  3  Denio  (N.  Y.)  125;  T.ee  v. 
Wilkins,  65  Tex.  295. 

»T»2  Doug.  650.  iT«  Rex  v.  Manning,  Comyns.  619. 

GEO.PAKT.— 10 


146  CHARACTERISTIC    FEATURES    OF    PABTNERSHIPS.  (Ch.   3 

of  the  surplus  remaining  after  the  obligations  were  discharged,  and 
that  the  vendee  on  such  sale  took  cum  onere,  subject  to  the  equi 
ties  of  the  other  partners  and  the  creditors/^^  it  became  very  nearly 
a  matter  of  necessity  for  courts  of  law  to  change  the  practice  in 
relation  to  such  sales,  although  Lord  Eldon  seems  to  have  expressed 
something  like  surprise  that  they  should  attempt  to  administer 
equity  upon  the  subject.^^'  If  the  several  vendees  of  an  undivided 
moiety  of  specific  parcels  of  goods  became  not  only  tenants  in  com- 
mon with  the  solvent  partner,  but  held  the  share  of  the  debtor  part- 
ner in  those  goods,  subject  to  a  partnership  account,  and  entitled, 
instead  of  the  definite  share  of  the  goods  which  they  had  pur- 
chased, only  to  a  share  of  a  surplus  which  might  exist  in  favor  of 
the  debtor  partner  upon  the  taking  of  such  account,  If  any  there 
happened  to  be,  or  to  nothing  if  no  surplus  existed,  as  the  case 
might  be,  and  were  liable  to  a  bill  in  equity,  in  which  these  mat 
ters  were  to  be  adjusted,  there  was  certainly  no  propriety  in  any 
longer  attempting  to  sell  an  undivided  share  of  the  specific  chat- 
tols  on  an  execution  at  law.  The  reason  and  necessity  for  a  change 
is  apparent.  The  sheriff  could  no  longer  convey  a  specific  share  of 
particular  goods.  If  he  attempted  to  sell  it,  the  purchaser,  through 
the  intervention  of  a  court  of  equity,  might  find  that  he  had  taken 
nothing  by  the  Siile.  But  if  the  partnership  was  not  in  fact  in 
solvent,  so  that  a  purchaser  might  take  something,  to  wit,  the 
debtor's  interest  in  the  surplus,  that  interest  was  not  an  undivided 
interest  in  any  particular  goods  separated  from  the  mass  of  the 
partnership  effects;  and  there  would  be  not  only  the  evils  sug- 
gested by  Mr.  Justice  Story  as  reasons  why  an  injunction  should 
be  granted  to  restrain  the  sale,*^'  but  a  question  might  also  arise 
whether,  in  case  the  goods  i*emaining  in  the  hands  of  the  solvent 

17  7  Lyndon  v.  Gorham,  1  Gall.  369,  Fed.  Cas.  No.  8,640. 

17  8  Waters  v.  Taylor,  2  Ves.  &  B.  301;  Button  v.  Morrison,  17  Ves.  206. 
Speaking  of  Eddie  v.  Davidson,  2  Doug.  G50,  Lindley  says  (Partn.  p.  357):  "Lord 
Mansfield's  innovation  was  therefore  discontinued,  and  it  was  finally  settled,  in 
coufornaity  with  the  older  cases,  that  the  sheriff's  duty  was,  and  it  still  is,  to 
seize  the  whole  of  the  partnership  effects,  or  so  much  of  them  as  may  be  requisite, 
and  to  sell  the  undivided  share  of  the  debtor  partner  therein,  without  reference 
to  the  state  of  the  accounts  as  between  him  and  his  co-partners."  This  is  the 
rule  in  many  American  jurisdictions.  Stumph  v.  Bauer,  76  Ind.  157.  See  cases 
cited  supra,   note  169. 

179  1  Story,  Eq.  Jur.  f  678.     See  cases  cited  post,  p.  152,  note  200 


§   -IS)  SALE    OF    partner's    INTEREST    ON    EXECUTION.  147 

partner  were  insufficient  to  pay  the  debts,  the  several  vendees  of 
the  separate  portions  of  the  goods  sold  at  different  times  on  sev- 
eral executions  were  to  contribute  to  make  up  the  deficiency,  or 
whether  the  vendees  under  the  prior  execution  and  sale  were  entitled 
to  hold  the  goods,  in  which  they  had  purchased  a  contingent  in- 
terest, until  those  which  had  been  delivered  to  subsequent  vendees 
had  been  exhausted.  And,  if  this  were  decided  in  favor  of  the 
vendees  under  the  prior  execution,  a  similar  question  might  arise 
among  them  respecting  a  priority  in  the  sales  to  themselves.  There 
must  have  been  a  constant  collision  between  the  principles  of  the 
courts  of  law,  thus  administered,  and  the  courts  of  equity,  in  re- 
lation to  this  subject,  had  the  former  continued  to  authorize  the 
sale  of  an  absolute,  undivided  interest  in  specific  portions  of  the 
partnei-ship  goods  upon  execution,  and  it  has  been  thought  that 
such  sale  by  the  sheriff  ought  to  be  restrained  by  injunction.*'"  If 
the  courts  of  law  are  unable  to  carry  out  the  principles  of  equity 
fully,  by  distributing  the  joint  and  separate  effects  among  the  joint 
and  separate  creditors,  respectively,  it  may  be  well  that  they  have 
been  disposed  to  follow  the  principles  established  in  chancery,  so 
far  as  the  nature  of  their  proceedings  will  admit,  leaving  the  equity 
jurisdiction  to  supply,  as  well  as  it  may,  the  deficiency.  The  prin- 
ciple that  the  partnership  effects  are  a  fund  to  be  applied  in  the 
first  place  to  the  payment  of  the  partnership  debts,  and  that  the 
interest  of  each  partner  is  only  his  share  of  the  surplus  after  they 
are  discharged,  has  accordingly  been  very  generally  recognized  as 
a  sound  principle  of  law,  and  has  been  of  very  easy  application  where 
the  separate  and  the  partnership  creditors  were  at  the  same  time 
striving  to  satisfy  their  demands  by  a  sale  upon  execution.  Pre- 
cedence has  been  given  in  such  cases  to  the  creditors  of  the  part- 
nership.*'* But  this  is  not  enough.  Having  established  this  prin- 
ciple, there  seemed  to  be  no  longer  any  ground  for  authorizing  the 

180  Vide  1  Story.  Eq.  Jur.  §  678:  Moody  v.  Payne,  2  Johns.  Ch.  (N.  Y.)  548; 
Gow,  Partn.  144. 

181  Tappan  v.  Blaisdcll,  5  N.  H.  190,  and  cases  there  cited;  Barber  v.  Bank,  9 
Conn.  410;  Eighth  Nat.  Bank  of  City  of  New  York  v.  Fitch,  49  N.  Y.  539; 
Fenton  v.  Folger,  21  Wend.  (N.  Y.)  670;  Dunham  v.  Murdock,  2  Wend.  (N.  Y.) 
553;  Crane  v.  French,  1  Wend.  (N.  Y.)  311;  Dyer  t.  Clark,  5  Mete  (Mass.) 
562;  Trowbridge  t.  Cushman,  24  Pick.  (Mass.)  310;  Pierce  v.  Jackson,  6  Mass. 
242;  Crawford  t.  Baum,  12  Rich.  Law  (S.  C.)  75;  Bogue's  Appeal,  83  Pa.  St. 
101;    Linford  v.  Linford,  28  N.  J.  Law,  113;    Commercial  Bank  r.  Mitchell,  5.** 


148  CHARACTERISTIC    FEATtRES    OF   PARTNERSHIPS.  (Ch.   3 

sheriff  to  seize  and  sell  an  undivided  interest  in  specific  portions  of 
the  goods  of  the  partnership,  upon  an  execution  against  an  in- 
dividual partner,  even  where  no  execution  against  the  partnership 
is  interposed;  and  the  later  authorities  hold  that  he  is  to  sell  the 
interest  of  the  debtor  partner.**^ 

"Mr.  Justice  Story,  in  his  Commentaries  on  Equity  Jurisprudence, 
says:  'It  is  well  known  that  at  law  an  execution  for  the  separate 
debt  of  one  of  the  partners  may  be  levied  upon  the  joint  property 
of  the  partnership.  In  such  a  case,  however,  the  judgment  creditor 
can  levy,  not  the  moiety  or  undivided  share  of  the  judgment  debtor 
in  the  property,  as  if  there  were  no  debts  of  the  partnership,  or 
lien  on  the  same  for  the  balance  due  to  the  other  partner;  but  he 
can  levy  the  interest  only  of  the  judgment  debtor,  if  any,  in  the 
property,  after  the  payment  of  all  debts  and  other  charges  thereon. 
In  short,  he  can  take  only  the  same  interest  in  the  property  which 
the  judgment  debtor  would  have  upon  the  final  settlement  of  all 
the  accounts  of  the  partnership.  When,  therefore,  the  sheriff  seizes 
such  property  upon  an  execution,  he  seizes  only  such  undivided  and 
unascertained  interest;  and,  if  he  sells  under  the  execution,  the 
sale  conveys  nothing  n)ore  to  the  vendee,  who  thereby  becomes  a 
tenant  in  common,  substituted  to  the  rights  and  interest  of  the  judg- 
ment debtor  in  the  property  seized.  In  truth,  the  sale  does  not 
transfer  any  part  of  the  joint  proi)erty  to  the  vendee,  so  as  to  en- 
title him  to  take  it  from  the  other  partners,  for  that  would  be 
to  place  him  in  a  better  situation  than  the  partner  himself.  But 
it  gives  him,  properly  speaking,  a  right  in  equity  to  call  for  an 
account,  and  thus  to  entitle  himself  to  the  interest  of  the  partner 
in  the  property  which  shall  upon  such  settlement  be  ascertained 
to  exist.'  ^**     This  seems  to  be  a  necessary  result  from  the  adop- 

Cal.  42;  Burpee  t.  Bunn,  22  Cal.  194;  Filley  v.  Phelps,  18  Conn.  294;  Ryder  v. 
Gilbert,  16  Hun  (N.  Y.)  1G3. 

182  See  cases  cited  supra,  note  169. 

188  1  Story,  Eq.  Jur.  §  677.  Vide,  also,  Button  t.  Morrison,  17  Ves.  206; 
Waters  v.  Taylor,  2  Ves.  &  B.  303;  Gow,  Partii.  144;  Crane  v.  French,  1  Wend. 
(N.  Y.)  313;  Scrugham  v.  Carter,  12  Wend.  (N.  Y.)  133;  Church  t.  Knox,  2 
Conn.  516;  President,  etc.,  of  Commercial  Bank  v.  Wilkins,  9  Greenl.  (Me.)  28; 
Gibson  v.  Stevens,  7  N.  H.  358.  The  purchaser  takes  an  undivided  and  unascer- 
tained interest,  and,  as  incident  thereto,  the  right  to  an  accounting  to  ascertain  the 
interest.  Clagett  v.  Kilboume,  1  Black,  346;  Cox  v.  Russell,  44  Iowa,  556;  Wil- 
son T.  Strobach,  59  Ala,  488;    Carter  t.  Roland,  53  Tex.  540.     Although  partner- 


§   oS)  SALE    OF    partner's    INTEREST    ON    EXECUTION.  149 

tion  of  the  principle  before  stated.  It  has  been  repeatedly  said 
that  the  creditor  can  have  no  greater  right  than  the  debtor  had, 
and,  if  Tie  can  take  only  the  same  interest  in  the  property  which  the 
judgment  debtor  would  have  upon  the  final  settlement  of  all  the  ac- 
counts of  the  partnership.'  such  interest  is  not  an  undivided  inter- 
est in  any  particular  portion  of  the  partnership  property,  to  be 
reduced  into  possession  to  the  exclusion  of  the  other  partners,  or 
sold  to  others.^ ^*  One  partner  has  no  right  to  convert  the  part- 
nership goods  to  his  own  purposes,^®"^  although  there  may  be  objec- 
tions to  sustaining  an  action  at  law  if  he  do  so.^"  Nor  is  it  an 
interest  which  may  be  subdivided  by  the  partner,  and  sold  out  to 
divers  persons,  by  a  sale  of  his  interest  in  particular  portions  of 
the  goods  belonging  to  the  partnership,  and  a  delivery  of  the  goods. 
He  has  no  authority  to  make  such  sales,  and  thereby  constitute  his 
several  vendees  tenants  in  common  with  his  co-partners  in  dif- 
ferent portions  of  the  goods.  lie  has  no  authority,  by  an  assign- 
ment of  his  interest,  to  take  from  the  creditors  or  the  other  part- 
ners the  right  to  have  their  claims  against  the  partnership  satis- 

ihip  property  has  been  attached  or  tiiken  in  execution  to  satisfy  the  claim  of  a 
creditor  of  one  of  the  partners,  a  subsequent  purchaser  from  the  partnership  will 
acquire  an  unincumbered  title.  Robinson  v.  Tevis,  38  Cal.  611;  President,  etc., 
of  Commercial  Bank  v.  Wilkins,  9  Greenl.  (Me.)  28;  Hill  t.  Wiggin,  31  N.  H. 
292;  Staats  v.  Bristow.  73  N.  Y.  2(J4.  Similarly,  the  land  of  a  partnership  may 
be  transferred  free  from  the  incumbrance  of  a  previous  judgment  against  one  of 
the  partners.  Kramer  v.  Arthurs,  7  Pa.  St.  165;  Lancaster  Bank  v.  Myley,  13 
Pa.  St.  544;  Mcily  v.  Wood,  71  Pa.  St.  488.  "The  corpus  of  the  partnership  ef- 
fects is  joint  property,  and  neither  partner  separately  has  anything  in  that  corpus, 
but  the  interest  of  each  is  only  his  share  of  what  remains  after  the  partnership  ac- 
counts are  taken."  Taylor  v.  Fields,  4  Ves.  396.  The  purchaser  of  the  execution 
partner's  interest  acquires  no  legal  title  and  no  right  of  possession  to  the  partner- 
ship goods  seized  in  execution.  Reinheimer  v.  Hemingway,  35  Pa.  St.  432;  Bar- 
rett V.  McKenzie,  24  Minn.  20.  An  assignee  who  has  turned  the  effects  of  a 
bankrupt  partnership  into  money  is  not  liable  in  assumpsit  to  the  judgment  cred- 
itor of  an  individual  partner,  although  the  sheriff  had,  under  the  judgment,  seized 
the  effects  prior  to  the  commission  in  bankruptcy,  and,  by  agreement  that  the  mes- 
senger should  hold  for  all  parties,  left  his  warrant  in  the  latter'a  handa,  Garbett 
▼.  Veale,  13  Law  J.  Q.  B.  98. 

184  Young  V.  Keighly,  15  Ves.  557. 

18B  Dob  V.  Halsey,  16  Johns.  (N.  Y.)  34,  8  Am.  Dec.  293;  Shirreff  v.  WUks,  1 
East,  48;  Livingston  v.  Roosevelt,  4  Johns.  (N.  Y.)  251,  4  Am.  Dec.  273;  Gram 
T.  Cadwell,  5  Cow.  (N,  Y.)  489. 

188  Jones  v.  Yates,  9  Barn.  &  C.  532.      See  post,  pp.  29S,  391. 


150  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

fied  out  of  the  property,^ ®^  nor  to  make  his  assignee  a  partner  in 
his  stead,  without  the  consent  of  his  co-partners.^**  Such  assign- 
ment operates  as  a  dissolution  of  the  partnership.^**  In  cases 
where  a  partner  may  sell  his  interest,  it  would  seem  that  he  must 
sell  it  entire,  and  without  excluding  his  co-partners  from  the  pos- 
session; and,  if  the  sheriff  sells,  he  must  sell,  generally,  the  in- 
terest of  the  debtor  in  the  whole  concern,  and  not  his  interest  in 
any  separate  portion  of  the  property.  It  is  admitted  that  the  sher- 
iff cannot  sell  the  goods.^""  If  the  sheriff  cannot  sell  an  interest 
in  specified  portions  of  the  goods  of  the  partnership,  there  seems 
to  be  no  reason  why  he  should  levy  upon  those  goods,  and  deliver 
them  to  the  vendee,  or  why  he  should  in  fact  reduce  them  into 
possession.  If  'in  truth  the  sale  does  not  transfer  any  part  of  the 
joint  property  so  as  to  entitle  him  [the  vendee]  to  take  it  from  the 
other  partner,'  ^'*  on  what  principle  is  the  sheriff  authorized  to 
seize  and  hold,  to  the  exclusion  of  the  other  partners,  what  his 
vendee,  after  a  sale  of  the  interest  of  the  debtor  is  perfected,  can 
not  take  from  them?  If  the  sheriff  sells  'only  the  interest  of  such 
partner,  and  not  the  effects  themselves,'"'  upon  what  ground  shall 
he  seize  the  effects  which  he  is  not  to  sell?  If  'the  creditors  of  the 
partnorsliip  have  a  preference  to  be  paid  their  debts  out  of  the 
partnership  funds  before  the  private  creditors  of  either  of  the  part- 
ners,' "'  and  this  'is  worked  out  through  the  equity  of  the  partners 
over  the  whole  funds,'  ***  that  equity  should  prevent  them  from 
being  deprived  of  the  means  of  payment  by  reason  of  such  seizure 
by  the  sheriff,  who  can  neither  sell  the  goods  nor  pay  the  creditors, 
and  against  whom  they  cannot  proceed  so  long  as  he  may  law- 
fully hold  the  goods.  In  Taylor  v.  Fields"*  Chief  Baron  MacDon- 
ald,  in  delivering  the  judgment  of  the  court  of  exchequer,  says: 

18*  Nicoll  T.  Mumford,  4  Johns.  Ch.  (N.  Y.)  .'')2o.      See  post,  p.  179,  "Partner's 

Lien." 

188  Murray  v.  Bogert,  14  Johns.  (N.  Y.)  318;    Kingman  v.  Spurr,  7  Pick.  (Mum,) 
238.    See  ante,  p.  74,  "Delectus  Personarum." 

189  Marquand  v.  President,  etc,  17  Johns.  (N.  Y.)  525.    See  post,  p.  39G. 
180  Scnij,'bam  v.  Carter,  12  Wend.  (N.  Y.)  131. 

191  1  Story,  Eq.  Jur.  §  677. 

192  King  V.  Sanderson,  1  Wightw.  50,  53,  cited  in  Moody  t.  Payne,  2  Johns.  Oh. 
(N.  Y.)  549. 

193  Moody  V.  Payne,  2  Johns.  Ch.  (N.  Y.)  549.      See  post,  p.  273. 
i»4  1  Story,  Eq.  Jur.  §  675.  »•»  4  Ves.  396. 


§    58)  SALE    OF    partner's    INTEREST    ON    EXECUTION.  151 

The  right  of  the  separate  creditor  under  the  execution  depends  up- 
on the  interest  each  partner  has  in  the  joint  property.  With  re- 
spect to  that,  we  are  of  opinion  that  the  corpus  of  the  partnership 
effects  is  joint  property,  and  neither  partner  separately  has  any- 
thing in  that  corpus,  but  the  interest  of  each  is  only  his  share  of 
what  remains  after  the  partnership  accounts  are  taken.'  And  again 
he  remarks:  TJn  law  there  are  three  relations:  First,  if  a  person 
chooses,  for  a  valuable  consideration,  to  sell  his  interest  in  the 
partnership  trade,  for  it  comes  to  that;  or  if  his  next  of  kin  or 
executors  take  it  upon  his  death;  or  if  a  creditor  takes  it  in  exe- 
cution, or  the  assignees  under  a  commission  of  bankruptcy.  The 
mode  makes  no  difference,  but  in  all  those  cases  the  application 
takes  place  of  the  rule  that  the  party  coming  in  the  right  of  the 
partner  comes  into  nothing  more  than  an  interest  in  the  partner- 
ship, which  cannot  be  tangible,  cannot  be  made  available  or  be 
delivered,  but  under  an  account  between  the  partnership  and  the 
partner;  and  it  is  an  item  in  the  account  that  enough  must  be  left 
for  the  partnership  debts.'  And  he  says  further:  If  the  partner 
himself,  therefore,  had  nothing  more  than  an  interest  in  the  sur 
plus  beyond  the  debts  of  the  partnership  upon  a  division;  if  it 
turns  out  that  at  common  law  that  is  the  whole  that  can  be  deliv 
ered  to  or  taken  by  the  assignee  of  a  partner,  the  executor,  the  sher- 
iff, or  the  assignee  under  a  commission  of  bankruptcy, — all  that  is 
delivered  to  the  creditor  taking  out  the  execution  is  the  interest 
of  the  partner,  in  the  condition  and  state  he  had  it,'  etc.  In  Smith's 
Case  "•  the  court,  after  saying  that  the  separate  creditor  takes  the 
share  of  his  debtor  in  the  same  manner  as  the  debtor  himself  had 
it,  and  subject  to  the  rights  of  the  other  partner,  add,  'The  sheriff, 
therefore,  does  not  seize  the  partnership  effects  themselves,  for  the 
other  partner  has  a  right  to  retain  them  for  the  payment  of  the 
partnership  debts.'  And  in  Crane  v.  French  ^"  Chief  Justice  Sav- 
age, after  considering  the  subject,  says:  'The  sheriff,  therefore,  sells 
the  mere  right  and  title  to  the  partnership  property,  but  does  not 
deliver  possession.'  "•  The  conclusion  that  the  sheriff,  upon  an 
execution  against  one  partner,  is  not  to  deliver  to  his  vendee,  and 

i»8  16  Johns.  (N.  T.)  108.  »•»  1  Wend.  (N.  T.)  313. 

188  Vide,  also,  Tappan  v.  Blaisdell,  5  N.  H.  liK);    Church  v.  Knox,  2  Oonn.  BIS, 
617. 


152  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.    3 

is  not  to  seize  the  partnership  effects,  is  sustained,  therefore,  not 
only  bj  the  reason  of  the  thing,  after  the  adoption  of  the  general 
principle  before  stated,  but  by  express  authority.  There  is,  un- 
doubtedly, a  difficulty  in  making  a  sale  of  the  entire  interest  of  one 
partner  upon  execution,  without  the  aid  of  equity  in  taking  an  ac- 
count before  the  sale,  because  ordinarily  it  cannot  be  known  until 
an  account  is  taken  what  is  the  value  of  the  interest  to  be  sold. 
But  this  difficulty  cannot  change  the  right  of  the  creditor  to  have 
the  interest  of  his  debtor,  whatever  it  may  be,  appropriated  to  the 
payment  of  his  debt;  and  althougL,  in  the  usual  course  of  sales  on 
execution,  at  law,  no  time  can  be  given  for  such  account  after  a 
seizure  upon  the  execution,  it  is  generally  for  the  interest  of  both 
creditor  and  debtor  that  the  full  value  should  be  obtained  upon 
such  sale,  and  this  part  of  the  matter  may  perhaps  be  well  left  to 
their  superintendence  and  management.^®'  If  the  interest  of  the 
debtor  partner  only  is  to  be  sold,  there  can  be  no  reason  why  equity 
should  interfere  by  way  of  injunction  to  restrain  the  sale  on  ac- 
count of  the  interest  of  the  other  partners."  *"• 

!»«>  Moody  ▼.  Payne.  2  Johns.  Ch.  (N.  Y.)  548. 

too  That  an  injunction  will  not  be  jrrantcd,  see  Moody  v.  Payne,  2  Johns.  Ch. 
(N.  Y.)  548;  Wickham  v.  Davis,  24  Minn.  IGT;  Jones  v.  Thompson,  12  Cal.  191; 
Hardy  v.  DonellniL  33  Ind.  501;  riiillips  v.  Cook,  24  Wend.  (N.  Y.)  380.  That 
an  injunction  will  be  granted,  see  Turner  v.  Smith,  1  Abb.  Prac.  N.  S.  (N.  Y.)  304; 
Crooker  v.  Crooker,  46  Me.  2,^0;  Nixon  v.  Nash,  12  Ohio  St.  047;  Place  v. 
Sweetzer,  16  Ohio,  142;  Sutcliffe  v.  Dohrnian,  18  Ohio,  181;  Thompson  v.  Frist, 
15  Md.  24;  Cropper  v.  Coburn,  2  Curt.  405,  Fed.  Cas.  No.  3,416;  Osborn  v.  Mc- 
Bride,  3  Sawy.  590,  Fed.  Cns.  No.  10,593;  Crane  v.  Morrison,  4  Sawy.  138,  Fed. 
Caa.  No.  3,355.  See,  geuonilly,  Newhall  v.  Buckingham,  14  111.  405;  Rainoy  v. 
Nance,  54  111.  29;  Mowbray  v.  Lawrence,  13  Abb.  Prac.  (N.  Y.)  317;  Hubbard 
V.  CurUs,  8  Iowa,  1;  Peck  v.  Schultze,  Holmes,  28,  Fed.  Cas.  No.  10,895;  Wiles 
V.  Maddox,  20  Mo.  77;  Scrugham  v.  Carter,  12  Wend.  (N.  Y.)  131;  Parker  v. 
Pistor,  3  Bos.  &  P.  288.  "It  is  true  that  the  execution  at  law  only  takes  the 
interest  of  tlie  partner  who  is  sued,  subject  to  partnership  debts.  •  •  •  If  those 
creditors  can  sell  only  subject  to  the  joint  creditors,  there  is  no  harm  in  suffering 
them  to  go  on  at  law;  and,  if  any  sacrifice  of  interest  of  the  separate  partner  is 
made  by  reason  of  the  uncertainty,  it  affects  only  that  partner  who  does  not  here 
raise  the  objection."  Chancellor  Kent,  in  a  case  where  it  was  contended  that 
partnership  effects  could  not  be  sold  on  execution  at  law  for  a  separate  debt  of 
one  partner  after  a  bill  filed  for  a  partnership  account.  Moody  t.  Payne,  2  Johns. 
Ch.  (N.  Y.)  548.  "The  right  of  the  partners  of  the  judgment  debtor  being  of  the 
nature  described,  and  it  being  incompatible  with  that  right  that  the  partnership 
property  seized  by  the  sheriff  should  be  removed  or  sold  by  him,  the  court  of  chan- 


§§   59-60)  TRANSFER    OF    SHARES.  163 

SAME— TRANSFER  OF  SHARES. 

69.  The   transfer  of  a  partner's  share  by  death  or  other- 

■wise    does  not  constitute  the  transferee  a  partner, 

except 
EXCEPTION— (a)  Where    the    other    partners    consent 

thereto  (p.  164). 
(b)  Where,  by  statute  or  custom,  shares  are  assignable, 

as  in  joint-stock  companies  or  mining  partnerships 

(p.  154). 

60.  With  these  exceptions,  the  effect  of  a  transfer   is   the 
following: 

(a)  Where   the  partnership  is   at  will,  the  transfer  dis- 

solves it  (p.  i'^S). 

(b)  Where  the  partnership  is  for  a  term,  the  other  mem- 

bers may  treat  the  assignment  as  a  cause  of  disso- 
lution, but  the  assignment  does  not  itself  dissolve 
the  partnership  (p.  l.")5). 

(c)  The  transferee  acquires  a  right  to  payment  of  what, 

upon  taking  the  accounts  of  the  partnership,  may 
be  due  to  his  assignor  (p.  155). 

It  has  been  seen  that  it  is  one  of  the  fundamental  principles  of 
partnership  law  that  no  person  can  be  introduced  as  a  partner  with- 
out the  consent  of  all  those  who  for  the  time  being  are  members 
of  the  firm.  This  is  the  doctrine  of  delectus  persouarum."^  If, 
therefore,  a  partner  dies,  his  executors  or  devisees  have  no  right 
to  insist  on  being  admitted  into  partnership  with  the  surviving  part- 
ners unless  some  agreement  to  that  effect  has  been  entered  into 
by  thera.*"'     Still  less  can  a  partner,  by  assigning  his  share,  en- 

cery  would,  before  the  judicature  acts,  on  a  bill  filed  by  the  judgment  debtor's  co- 
partners against  the  judgment  debtor  and  his  creditor  and  the  sheriff,  direct  the 
partnership  accounts  to  be  taken,  and  restrain  the  sheriff  from  seCing  the  property, 
and  appoint  a  receiver."      Lindl.  Partn.  p.  360. 

*oi  Ante,  p.  74. 

»o»  Tatam  v.  Williams,  3  Hare.  347;  Crawahay  ▼.  Maule,  1  Swanst  495;  QU- 
legpie  ▼.  Hamilton,  3  Madd.  254;    Pearoe  t.  Chamberlain.  2  Ves.  Sr.  8S. 


154  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  (Ch.   3 

title  his  assignee  to  take  his  place  in  the  partnership,  against  the 
will  of  the  other  members.^"^ 

Transfer  Allowed  hy  Agreement. 

Partners  may  agree  in  advance,  as  by  their  partnership  agree- 
ment, that  any  of  them  shall  be  at  liberty  to  introduce  any  other 
person  into  the  partnership.^"*  Those  who  form  such  partnerships, 
and  those  who  join  them  after  they  are  fonned,  consent  to  be- 
come partners  with  any  one  who  is  willing  to  comply  with  the  pre- 
scribed conditions.  Thus,  it  was  said  in  Lovegrove  v.  Nelson:"" 
"To  make  a  person  a  partner  with  two  others,  their  consent  must 
clearly  be  had,  but  there  is  no  particular  mode  or  time  required  for 
giving  that  consent;  and  if  three  enter  into  a  partnership  by  a 
contract  which  provides  that,  on  one  retiring,  one  of  the  remain 
ing  two,  or  even  a  fourth  person,  who  is  no  partner  at  all,  shall 
name  the  successor  to  take  the  share  of  the  one  retiring,  it  is  clear 
that  this  would  be  a  valid  contract,  which  the  court  must  perform, 
and  that  the  new  partner  would  come  in  as  entirely  by  the  con 
sent  of  the  other  two  as  if  they  had  adopted  him  by  name." 
Joint- Stock  Companies — Mining  Partnerships. 

It  has  been  seen  that  the  principle  of  delectus  personarum  does 
not  apply  to  joint-stock  companies,^*"  nor  to  mining  partnerships.^"" 
Mines  are  a  peculiar  species  of  property,  and  are,  in  some  respects, 
governed  by  the  doctrines  of  real-property  law,  and  in  others  by 
the  doctrines  which  regulate  trading  concerns.  Regarding  them  as 
real  property,  and  their  owners  as  joint  tenants  or  tenants  in  com 
raon,  each  partner  is  held  to  be  at  liberty  to  dispose  of  his  inter- 

208  Bank  v,  Carrollton  Kailroad,  11  Wall.  G24;  Love  v.  Payne,  73  Ind.  80; 
Meaher  v.  Cox,  37  Ala.  201;  Morrick  v.  Brainard,  38  Barb.  (N.  Y.)  574;  Setzer 
V.  Beale,  19  W.  Va.  274;    Jefferys  v.  Smith,  3  Kuss.  158. 

2  04  Maybew's  Case,  5  De  Gex,  M.  &  G.  837;  Fox  v.  Clifton,  9  Bing.  119;  Jef- 
ferys V.  Smith,  3  Kuss.  158;  McGlensey  v.  Cox,  1  I'hila.  (Pa.)  387.  As  to  ratifi- 
cation and  acquiescence  in  transfer,  see  Love  v.  Payne,  73  Ind.  80;  Rosenstiel  v. 
Gray,  112  111.  282;  Meaher  v.  Cox,  37  Ala.  201;  Mason  v.  Connell,  1  Whart. 
(Pa.)  381;  Wood  v.  Connell,  2  Whart.  (Pa.)  542;  Tabb  t.  Gist,  1  Brock.  88, 
Fed.  Gas.  No.  13,719;    Buckingham  ▼.  Hanna,  20  Ind.  110. 

205  3  Mylne  &  K.  1-20. 

»oe  See  ante,  p.  75. 

JOT  Id. 


§§  59-60)  TRANSFER    OF   SHARES.  1,35 

est  in  the  land  without  consulting  his  co-owners;"*'  and  a  trans- 
fer of  this  interest  confers  upon  the  transferee  all  the  rights  of  a 
part-owner,  including  a  right  to  an  account  against  the  other  own- 
ers."" But  even  here,  if  the  persons  originally  interested  in  the 
mine  are  not  only  part  owners,  but  also  partners,  a  transferee  of 
the  share  of  one  of  them,  although  he  would  become  a  part  owner 
with  the  others,  would  not  become  a  partner  with  them,  in  the  prop- 
er sense  of  the  word,  unless  by  agreement,  express  or  tacit.' ^^ 
Ships. 

Similar  observations  apply  to  transfers  of  shares  in  ships.'" 
Effect  of  Transfer — As  Regards  Dissolution. 

The  effect  of  the  transfer  of  a  partner's  share,  as  regards  a  disso 
lution,  has  already  been  considered  in  connection  with  the  doctrine 
of  delectus  personarum."'  Where  the  partnership  is  at  will,  the 
transfer  dissolves  it"'  Where  the  partnershii)  is  for  a  term,  the 
other  members  may  treat  the  assignment  as  a  cause  for  dissolution, 
but  the  assignment  does  not  itself  dissolve  the  partnership.*^* 
Same — As  Regards  Accounting. 

Although  a  partner  cannot,  by  transferring  his  share,  force  a 
new  partner  on  the  other  members  of  the  firm  without  their  con- 
sent, there  is  nothing  to  prevent  a  partner  from  assigning  or  mort- 
gaging his  share  without  consulting  his  co-partners;  and,  if  a 
partner  does  assign  or  mortgage  his  share,  he  thereby  confers  upon 
the  assignee  or  mortgagee  a  right  to  payment  of  what,  upon  tak- 
ing the  accounts  of  the  partnership,  may  be  due  to  the  assignor 
or  mortgagor.'^"     But  the  assignee  or  mortgagee  acquires  no  other 

S08  Kahn  v.  Smelting  Co.,  102  U.  S.  641;  Bissell  v.  Foss,  114  U.  S.  252,  5  Sup. 
Ct  851;    Duryea  v.  Burt,  28  Cal.  569;    Taylor  v.  Castle,  42  Cal.  3G7. 

209  See  Bentley  v.  Bates,  4  Younge  &  U.  182;  Redmayne  v.  Forster,  L.  R.  2 
Eq.  407. 

210  As  in  Jefferys  v.  Smith,  3  Ruas.  158.  And  see  Crawshay  v.  Maule,  1  Swanat 
518. 

211  Lindl.  Partn.  p.  3GG;    ante,  c.  1,  notes  21,  22. 

212  See  ante,  p.  74.    See,  also,  post,  p.  397. 

21 «  Bates,  Partn.  §  162;    LindL  Partn.  p.  363.    See  Heath  v.  Sansom,  4  Barn. 
&  Adol.  172,  and  post,  p.  397. 
21*  See  post,  p.  393. 
216  Whetham  v.  Davey,  30  Ch.  Div.  574;    Glyn  t.  Hood,  1   Gifif.  328;    Hank  i 


1,35  CHARACTERISTIC    FEATURES    OF    PARTNERSHIPS.  CCh.   3 

right  than  this,"®  and  he  takes  subject  to  the  rights  of  the  other 
partners,  and  will  be  affected  by  equities  arising  between  the  as- 
signor and  his  co-partners  subsequently  to  the  assignment.*"  Even 
if  the  assignee  gives  notice  of  the  assignment,  he  cannot,  if  the 
partnership  is  for  a  term,  acquire  a  right  to  the  assignor's  share 
as  it  stands  at  the  time  of  the  assignment  or  notice,  discharged 
from  subsequently  arising  claims  of  the  other  partners."*  The  as- 
signment cannot  deprive  them  of  their  right  to  continue  the  part- 
nership, and  consequently  to  bring  subsequent  dealings  and  trans- 
actions into  account.  It  seems,  however,  that  an  assignee  of  a 
share  in  a  partnership  can  compel  the  other  partners  to  come  to 
an  account  with  him."' 

Carrollton  Railroad,  11  WaU.  624.  The  assignee  acquires  the  interest  of  the  selling 
partner,  without  the  rights  of  membership.  He  is  entiUed  to  a  dissolution  and  ac- 
count to  determine  his  interest.  Clagett  v.  Kilbourne  1  Black,  346;  Bank  v.  Car- 
rollton Railroad,  11  Wall.  624;  Fellows  v.  Greenleaf.  43  N.  H.  421;  Miller  t. 
Brigham,  50  Cal.  615. 

216  Smith  V.  Parkes,  16  Beav.  115. 

21T  See  Cavander  v.  Bultcel,  9  Ch.  App.  79;  Lindsay  t.  GibbB,  3  De  Gex  &  J. 
G90;    Liodl.  I'artn.  p.  364. 

218  See  Bergmann  v.  MacMUlan,  17  Ch.  Div.  423;  Cavander  v.  Bulteel,  9  Ch. 
App.  79;    Kelly  v.  Button,  3  Ch.  App.  703;    Redmayne  t.  Forster,  li.  R.  2  Eq. 

467. 
«i»  See  Whetham  t.  DaTcy,  30  Ch.  DIt.  674. 


§    61)  IMPLIED    fllGHTS    AND    LIABILITIES    INTER    SB.  167 

CHAPTER  IV. 

IMPLIED   RIGHTS  AND   LIABILITIES  INTER   SBL 

61.  Right  to  Participate  in  Management. 

62-64.  Righta  and  Powers  of  Majority. 

65.  Duty  to  Exercise  Care  and  SkilL 

66.  Duty  to  Observe  Good  Faith. 

67.  Right  to  Benefits  from  Transactions  Concerning  Finn  Interests. 

68.  Right  to  Compete  with  Firm. 

69.  Right  to  Benefits  Resulting  from  Connection  with  Firm. 

70.  Right  to  Compensation  for  Services. 
71-72.    Right  to  Interest  on  Balances. 

73.  Right  of  Partner  to  Indemnity  and  Contribution. 

74.  Duty  to  Conform  to  Agreement. 

75.  Right  to  Information  as  to  Conduct  of  Business. 

76.  Duty  to  Keep,  and  Right  to  Inspect,  Accounts. 

77-79.    Right  to  have  Partnership  Property  Applied  to  Partnership  Debts— Part- 
ner's Lien. 
80-81.    Division  of  Profits. 

RIGHT  TO  PARTICIPATE  IN  MANAGEMENT. 

61.  Unless  there  has  been  an  express  mutual  agreement  to 
the  contrary,  all  the  members  of  a  partnership  have 
equal  rights  as  to  the  management  of  the  firm  busi- 
ness. 

It  is  to  be  presumed  always  that  one  partner  has  as  great  rights 
as  another  respecting  the  carrying  on  of  the  business  of  the  part- 
nership,^ but,  as  a  matter  of  fact,  their  rights  in  this  respect  are 
not  thus  always  equal.  The  partners  may  stipulate  among  them- 
selves that  one  of  them  shall  have  control  over  one  department  of 
the  business,  and  another  over  another  department.  Indeed,  they 
may  stipulate  to  the  effect  that  one  or  more  of  their  number  shall 
have  no  part  in  the  business  management  at  all.  Such  a  stipula- 
tion is  perfectly  valid,  and  may  be  enforced  against  the  partner 

1  Lloyd  T.  Loaring,  6  Ves.  777;  Rowe  v.  Wood,  2  Jac.  &  W.  568;  Marshall  t. 
Colman,  Id.  266;    Goodman  v.  Whitcomb,  1  Jac  &  W.  589. 


158  IMPLIED    RIGHTS    AND    LIABILITIES    INTER   SE.  (Ch.  4 

who  has  by  it  relinquished  his  right.'  On  the  other  hand,  if  a  part- 
ner is  excluded  from  the  management  of  the  common  business  by 
his  co-partners  in  the  absence  of  such  stipulation,  he,  too,  may  have 
appropriate  redress  upon  his  seeking  it  and  making  out  a  proper 
case.  The  courts  are  open  to  the  partners  in  both  the  situations 
mentioned,  that  their  rights  under  their  existing  agreement  may 
be  maintained.* 

RIGHTS  AND  POWERS  OF  MAJORITY. 

62.  Where  differences  arise  as  to  matters  in  the  ordinary- 

course  of  the  partnership  business,  they  are  to  be 
decided  by  a  majority  of  the  partners;  but  the  de- 
cision must  be  arrived  at  in  good  faith  for  the  in- 
terest of  the  firm  as  a  whole,  and  not  for  the  pri- 
vate interest  of  all  or  any  of  the  majority,  and  all 
the  partners  must  be  consulted. 

63.  This  rule  extends  to   powers  conferred   on  a  majority 

of  the  partners  by  express  agreement. 

64.  No  change  can  be  made   in  the  nature  of  the  partner- 

ship business  except  with  the  consent  of  all  the 
partners. 

The  partnership  articles  ought  to  provide  expressly  just  what 
weight  is  to  be  accorded  the  desires  of  a  majority  in  cases  of  dif- 
ferences among  the  partners.  If  there  is  no  such  provision  made, 
the  power  of  the  majority  depends  on  the  emergency  which  de- 
velops the  difference;  for  if  the  point  is  one  affecting  the  legiti- 
mate business  of  the  firm,  and  the  method  of  carrying  it  on,  a 
different  rule  applies  than  would  apply  to  a  case  where  the  point 
has  reference  to  some  proposed  departure  from  the  strict  line  of 
such  business.  In  the  latter  case  there  is  no  ruling  power  in  the 
majority  at  all.*     In  the  former  case  the  majority  rules  the  mi- 

a  1  Lindl.  Partn.  302. 

»  Goodman  v.   Whitcomb,   1  Jac.  &   W.   589;     Marshall  t.   Colman,  2  Jac  & 
W.  266. 
*  Livingston  t.  Lynch,  4  Johns.  Ch.  (N.  T.)  673;    Jennings'  Appeal  (Pa.  Sop.) 


§§    62-64)  RIGHTS    AND    POWERS    OF    MAJORITY.  159 

noritj,'*  if  thej  act  in  good  f aith «  and  all  have  been  consulted.' 
But,  when  there  is  an  equal  division  in  sentiment  in  regard  to  any 
parti] ership  concern,  those  partners  opposed  to  the  introduction  of 
change  in  the  old  routine  always  prevail  over  the  others.'  The 
majority  here  referred  to  is  the  majority  so  far  as  numbers  are 
concerned,  and  not  a  majority  in  respect  of  the  contributions  to 
the  capital  of  the  partnership.'  The  voice  of  the  majority  will  not 
prevail,  however,  when  exercised  in  a  merely  captious  spirit,  and, 
where  it  appears  that  there  had  been  on  the  part  of  the  many  a 
disposition  to  oppose  the  few  for  no  reason  other  than  mere  con- 
trariety, a  court  of  equity  will  not  give  effect  to  the  majority  de- 
cision.^" The  majority  cannot,  in  the  face  of  objection  by  the 
minority,  delegate  to  a  manager  the  right  to  sign  the  firm  name.^^ 
Nor  can  it  decide  where  the  business  of  the  partnership  is  to  be 
carried  on  after  the  expiration  of  the  lease  of  the  premises  where 
the  business  has  been  habitually  carried  on  heretofore."  The  ques- 
tion as  to  the  particular  times  when  division  of  profits  shall  be 
had,  and  the  amount  of  profits  that  shall  be  divided  at  any  given 
time,  are  in  the  hands  of  the  majority  to  decide,  always,  unless, 
otherwise  provided  for  by  agreement." 

16  Atl,  19;  Zabriskie  v.  Railroad  Co.,  18  N.  J.  Eq.  178;  Kean  v.  Johnson,  9  N. 
J.  Eq.  401;    Abbot  v.  Johnson,  32  N.  H.  9. 

B  Faulds  V.  Yates,  57  111.  416;  Kirk  v.  Hodgson,  3  Johns.  Ch.  (N.  Y.)  400; 
Waterbury  v.  Express  Co.,  50  Barb.  (N.  Y.)  157,  168;  Peacock  v.  Cummings,  46 
Pa.  St.  434;  Western  Stage  Co.  v.  Walker,  2  Iowa,  504;  Zabriskie  v.  Roikoad 
Co.,  18  N.  J.  Eq.  178.      Cf.  Irvine  v.  Forbes,  11  Barb.  (N.  Y.)  587. 

8  Blisset  V.  Daniel,  10  Hare,  493;    Const  v.  Harris,  Turn.  &  R.  496,  525. 

7  Western  Stage  Co.  v.  Walker,  2  Iowa,  504;  Const  v.  Harris,  Turn.  &.  B.  496, 
525. 

8  Johnston  y.  Dutton's  Adm'r,  27  Ala.  245.  And  see  Donaldson  v.  Williams,  1 
Cromp.  &  M.  345. 

9  Story,  Partn.  §  123. 

10  Lord  Eldon  in  Const  t.  Harris,  Turn.  &  R.  496,  528. 

11  Beveridge  t.  Beveridge,  L.  R.  2  H.  L.  Sc.  183. 

12  Clements  v.  Norris,  8  Ch.  Div.  129. 

IS  Steyens  v.  Railway  Co.,  9  Hare,  313;  Stupart  ▼.  Arrowsmlth,  8  Smale  &  O, 
176;    Robinson  t.  Thompson,  1  Yern.  465. 


160  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Cll,    4 


DUTY  TO  EXERCISE  CARE  AND  SKILL. 

65.  A  partner's  act,  done  in  the  flrm  name  and  -within  the 

scope  of  its  business,  does  not  render  him  liable  to 
his  co-partners,  though  it  results  in  a  loss,  provided 
PROVISO — (a)  He  acted  in  good  faith,  and 
(b)  He  exercised  reasonable   skill  and  diligence. 

A  partner,  like  any  other  agent,  must  exercise  reasonable  care, 
skill,  and  diligence  in  the  conduct  of  the  firm's  business.  For  any 
loss  caused  by  default  in  this  respect  he  is  liable  to  his  co-partners, 
just  as  any  agent  is  liable  to  his  principal  for  a  loss  caused  by  hia 
negligence.  But  a  partner  is  not  liable  for  losses  that  have  resulted 
merely  from  his  lack  of  discretion  or  good  judgment.  Thus,  a  part- 
ner who,  without  the  consent  of  his  co-partner,  leases  property  for 
the  use  of  the  firm,  is  not  liable,  on  dissolution  of  the  partnership, 
to  his  co-partner  for  loss  occasioned  by  such  lease,  though  he  acted 
unwisely,  where  his  conduct  was  not  fraudulent  or  wanton.^* 

DUTY  TO  OBSERVE  GOOD  FAITH. 

66.  Partnership  is  a  relation  of  trust  and  confidence,  and 

the  partners  must  at  all  times  conduct  themselves 
•with  perfect  good  faith  tO"wards  each  other. 

The  utmost  good  faith  is  due  from  every  member  of  a  part- 
nership towards  every  other  member,  and,  if  any  dispute  arises 
between  partners  touching  any  transaction  by  which  one  seeks  to 
benefit  himself  at  the  expense  of  the  firm,  he  must  show  that  his 
conduct  conforms  to  the  highest  standard  of  honor.^'  Thus,  if  one 
partner  knows  more  about  a  state  of  the  partnership  accounts  than 
another,  and,  concealing  what  he  knows,  enters  into  an  agreement 
with  that  other  relative  to  some  matter  as  to  which  a  knowledge 

1*  Charlton  v.  Sloan,  76  Iowa,  288,  41  N.  W.  803. 

i»  Goodwin  t.  Einstein,  51  How.  Prac.  (N.  Y.)  9;  Comstock  t.  Buchanan,  57 
Barb.  (N.  Y.)  127;    Bentley  t.  Craven,  18  Beav.  75. 


§  66)  DUTY  TO  OBSERVE  GOOD  FAITH.  161 

of  the  statp  of  accounts  is  material,  such  agreement  will  not  be  al- 
lowed to  stand.^' 

This  obligation  to  perfect  fairness  and  good  faith  is  not  confined 
to  persons  who  actually  are  partners.  It  extends  to  persons  nego- 
tiating for  a  partnership,  but  between  whom  no  partnership  as  yet 
exists;  ^^  and  also  to  persons  who  have  dissolved  partnership,  but 
who  have  not  completely  wound  up  and  settled  the  partnership  af- 
fairs; ^*  and  most  especially  is  good  faith  required  to  be  observed 
when  one  partner  is  endeavoring  to  get  rid  of  another,  or  to  buy 
him  out.^® 

Notwithstanding  the  universal  application  to  partners  of  the  rule 
requiring  perfect  good  faith,  if  one  partner  repudiates  the  con- 
tract of  partnership,  and  will  not  perform  his  duty  towards  his 
co-partners,  he  cannot  justly  complain  if  they,  in  return,  decline 
to  treat  him  on  a  footing  of  equality  with  themselves."  As  ob- 
served by  Lord  Eldon  in  Const  v.  Harris, ''^  "A  partner  who  com- 
plains that  the  other  partners  do  not  do  their  duty  towards  him 
must  be  ready  at  all  times  and  offer  himself  to  do  his  duty  towards 
them,"  But  if  a  partner  has  been  set  at  defiance  by  his  co-partners; 
if  they  have  denied  that  he  is  a  partner,  and  that  he  has  any  right 

i«  Maddeford  v.  Austwick,  1  Sim.  89.  And  see  Blihset  v.  Daniel,  10  Hare,  493, 
522;    Cassels  v.  Stewart,  6  App.  Gas.  64. 

17  Densmore  Oil  Co.  v.  Deusmore,  64  Pa.  St.  43;  Fawcett  v.  Whitehouse,  1 
Russ.  c^  M.  132;    Hichens  v.  Cougreve,  Id.  150. 

18  Belts  V.  June,  51  N.  Y.  274;  Jones  v.  Dexter,  130  Mass.  380;  Beam  v.  Ma- 
comber,  33  Mich.  127;  Warren  v.  Schainwald,  62  Cal.  56;  Lees  v.  Laf crest,  14 
Beav.  250;    Clegg  v.  Fish  wick,  1  Macn,  &  G.  294. 

i»  Chandler  v.  Dorsett,  Finch.  431;  Blisset  v.  Daniel,  10  Hare,  493;  Madde- 
ford V.  Austwick,  1  Sim.  89.  But  see  Geddes'  Appeal,  80  Pa.  St  442;  Bradbury 
T.  Barnes,  19  Cal.  120.  Cigarette  manufacturers  purchased  the  interest  of  their 
partner,  concealing  from  him  the  existence  of  a  contract  by  which  the  patentee 
of  a  cigarette  making  machine  had  granted  the  firm  the  use  cf  his  machines  at  a 
much  lower  rate  than  was  given  other  manufacturers,  thereby  greatly  increasing 
the  profits  of  the  firm;  and  kuowledge  of  such  contract  could  not  have  been  ac- 
quired by  an  inspection  of  the  partnership  books.  Held,  that  the  retiring  partner 
co\ild  maintain  an  action  for  deceit.  Wright  v.  Duke,  91  Hun,  409,  36  N.  Y.  Supp. 
853. 

2  0  ReUly  v.  Walsh,  11  Ir.  R.  Eq.  22;    McLure  t.  Ripley,  2  Macn.  &  G.  274. 

>i  Turn.  &  R.  496,  524. 
GE0.PART.~11 


162  IMPI.IKD    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

to  interfere  in  the  partnei*sbip, — they  can  derive  no  advantage  from 
the  circumstance  that  he  has  not  performed  his  dutj  to  them." 


SAME— EIGHT    TO    BENEFITS    FEOM    TRANSACTIONS   CON- 
CERNING FIRM  INTERESTS. 

67.  Benefits  arising  from  a  transaction  concerning  firm 
interests,  intended  by  the  partner  to  accrue  to  him- 
self only,  accrue  to  his  partner  as  "well  as  to  himself. 

The  purchase  by  one  partner  of  property  of  any  kind,  in  which 
the  partnership  is  concerned,  may  be  regarded  as  a  purchase  for 
the  firm,  and  each  co-partner  is  entitled  to  his  share  in  it,  upon 
his  reimbursing  the  purchasing  partner  to  that  extent"  Where 
two  persons  were  partners  at  will,  and  one  of  them  brought  his  son 
into  the  firm,  and  then,  in  contemplation  of  forming  a  partnership 
between  his  son  and  himself  exclusively,  renewed,  in  the  name  of 
the  contemplated  finn,  a  lease  of  property  upon  which  the  present 
firm  enjoyed  a  lease  existing,  and  thereafter,  for  the  first  time,  noti- 
fied the  other  partners  of  his  intention  to  dissolve  the  present  part- 
nerehip,  it  was  held  that  the  lease  was  renewed  for  all  the  partners, 
and  not  only  for  those  for  whom  the  renewal  was  expressly  made.'* 
But  there  was  a  much  stronger  case  in  New  York,  determined  in 
a  similar  manner.  There  the  partnership  had  been  formed  to  come 
to  an  end  on  a  day  certain,  and  the  lease  had  been  made  to  ter- 
minate on  the  same  day;  but,  because  one  partner  had,  without  his 
co-partners'  knowledge,  taken  a  lease  in  his  own  name,  the  court 
held  him  to  be  in  so  far  a  trustee  for  the  firm.^'  Lindley  goes  so 
far  as  to  intimate  -®  that  a  partner,  by  his  act  in  availing  him- 
self of  an  o]»portunity  to  acquire  for  his  own,  as  he  thinks,  some- 
thing that  he  ought,  in  duty  to  his  fii-m,  to  acquire  for  it,  if  at  all, 

22  Dale  T.  Hamilton,  2  Phil.  Ch.  276. 
2  8  Anderson  v.  Lemon,  8  N.  Y.  236. 

24  Featherstonhiiugh  v.  Fenwick,  17  Ves.  298.. 

25  Mitchell  V.  Reed,  61  N.  Y.  123.  And  see  Strnthers  t.  Pearoe,  51  N.  T.  857; 
Anderson  v.  Lemon,  8  N.  Y.  236;    Johosou's  Appeal  (Pa.  Sup.)  8  Atl.  36. 

««  Partn.  307. 


§    G7)  TRANSACTIONS    CONCERNING    FIRM    INTERiSIS.  163 

makes  the  acquisition  for  the  firm,  in  spite  of  himself,  if  his  co-part- 
ners see  fit  to  have  it  so;  but  he  cannot  renew  a  lease,  and  require  his 
co-partners  to  make  the  act  a  firm  one,  against  their  wills,  without 
an  agreement  between  them  giving  him  that  right.'^  It  should 
be  stated  in  this  connection  that  the  rule  requiring  benefits  acquired 
clandestinely  to  inure  to  the  firm,  rather  than  to  the  partner  seek- 
ing them  for  his  own,  does  not  necessarily  apply  to  the  case  of  an 
acquisition  of  property  by  a  partner  after  dissolution  of  the  firm.* 
Where,  of  two  partners,  brother  and  sister,  the  latter  had  regularly 
carried  on  the  business,  the  brother  being  abroad  almost  all  the 
while,  and  then  had  married  after  a  while,  and  had  thereafter  con- 
tinued in  the  same  business,  and  had  purchased  property  for  its 
purposes,  such  property  was  held  to  belong  to  her  solely."  When 
to  one  of  two  partners  was  committed  the  duty  of  purchasing  for 
the  firm,  in  the  line  of  their  business,  a  commodity  obtained  from 
a  mine  in  the  neighborhood  of  a  store  which  he  ran  as  an  in- 
dividual enterprise,  and  he,  without  the  privity  of  his  co-partner, 
paid  for  the  commodity  in  goods  from  his  store,  as  of  their  market 
price,  it  was  held  that  he  could  not  retain  the  profits  on  his  goods 
so  disposed  of,  but  must  account  to  the  firm  for  all  the  difference 
between  such  price  and  the  original  cost  of  the  goods  to  him,^° 
Except  by  consent  of  the  firm,  a  pai-tuer  may  not  profit  by  any 
transaction  between  himself  and  his  firm.  Thus,  where  a  partner 
furnished  to  his  firm,  at  the  then  prevailing  market  price,  goods 
which  he  had  previously  obtained  at  a  lower  price,  he  was  not  al- 
lowed to  enjoy  the  profit  unshared  by  his  co-partners;'**  and  where 
partners  had  agreed  that  property  purchased  by  them  to  sell  again 
should  be  sold  to  a  person  named,  and  for  a  named  sum,  and  one 
of  the  partners  sold  it,  for  a  larger  sum,  to  a  company  in  which 
he  had  an  interest,  it  was  held  that  both  partners  should  partiei- 

27  Clements  v.  Norris,  8  Ch.  DiT.  129. 

♦Pierce  v.  McClellan.  93  111.  245;  Chittenden  r.  Witbeck,  50  Mich.  401,  15  N. 
W.  52G;  Nerot  v.  Burnand,  4  Kuss.  247;  Payne  t.  Hornby,  25  Beav.  280.  But 
see  Spiess  t.  Rosswog,  63  How.  Prac.  (N.  Y.)  401. 

2  8  Nerot  V.  Burnand,  4  Russ.  247. 

28  Burton  v.  Wookey,  6  Madd.  367. 
»•  Bentley  t.  Craven,  18  Beav.  75. 


1G4  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.    4 

pate  in  the  whole  profits.'^  It  is  unnecessary  to  say  that  a  partner 
need  not  account  to  his  firm  for  a  benefit,  personal  to  himself,  re- 
ceived outside  the  affairs  of  the  partnership;  but  neither  need  he 
account  for  such  a  benefit  received  inside  the  partnership  affairs,  If 
it  was  intended  for  him  only.^' 

SAME— RIGHT  TO  COMPETE  WITH  FIRM. 

68.  A  partner  may  not  compete  "with  his  jirm  in  a  matter 
of  business.  If  he  does  so  -without  consent  of  the 
other  partners,  he  must  account  to  the  firm  for  all 
profits  made  in  such  business,  and  must  make 
compensation  to  the  firm  for  any  loss  occasioned 
thereby. 

"It  is  a  maxim  of  courts  of  equity  that  a  person  who  stands  in 
a  relation  of  trust  or  confidence  to  another  shall  not  be  permitted, 
in  pursuit  of  his  private  advantage,  to  place  himself  in  a  position 
which  gives  him  a  bias  against  the  due  discharge  of  that  tinist 
or  confidence."  "  One  of  the  members  of  a  firm  engaged  in  the 
conduct  of  a  newspaper  procured  an  item  for  publication  in  that 
paper,  which  item  his  co-partners,  who  were  engaged  in  the  con- 
duct of  another  paper  also,  got  hold  of  and  published,  without  his 
consent,  in  the  latter  paper  before  it  could  be  published  in  the 
former.  Commenting  on  these  facts,  the  court  said,  "The  principles 
of  courts  of  equity  will  not  permit  that  parties  bound  to  each  other, 
by  express  or  implied  contract,  to  promote  nn  undertaking  for  the 
common  benefit,  should  any  of  them  engage  in  another  concern 
which  necessarily  gives  them  a  direct  interest  adverse  to  that  un- 
dertaking." For  example,  there  is  necessarily  some  degree  of  ri 
valry  between  a  morning  and  an  evening  paper.'* 

81  Dunne  v.  English,  L.  R.  18  Eq.  524. 

82  Campbell  v.  Mullett,  2  Swanst.  551;    Moffatt  ▼.  Farquharson,  2  Brown,  Oh. 
338. 

88  See  Sir  John  Leach  in  Burton  v.  Wookey,  6  Madd.  367,  368. 
•«  Qlassington  y.  Thwaites,  1  Sim.  &,  S.  133. 


§    70)  RIGHT    TO    COMPENSATION    FOR    SKRVICES.  165 

SAME— RIGHT    TO    BENEFITS   RESULTING   PROM  CONNEC- 
TION WITH  FIRM. 

69.  A  partner  may  not  carry  on,  for  his  individual  profit, 

a  business  -which,  but  for  his  connection  -with  the 
fiLrm,  he  ■would  not  have  been  able  to  secure. 

A  partner,  moreover,  is  not  allowed,  in  transacting  the  partner- 
ship affairs,  to  carry  on  for  his  own  sole  benefit  any  separate  trade 
or  business,  which,  were  it  not  for  his  connection  with  the  part- 
nership, he  would  not  have  been  in  a  position  to  carry  on.  Bound 
to  do  his  best  for  the  firm,  he  is  not  at  liberty  to  labor  for  himself 
to  their  detriment;  and,  if  his  connection  with  the  firm  enables  him 
to  acquire  gain,  he  cannot  appropriate  that  gain  to  himself  on  the 
pretense  that  it  arose  from  a  separate  transaction  with  which  the 
firm  had  nothing  to  do.  This  is  well  exemplified  by  the  cases  as 
to  renewed  leases  which  have  been  already  referred  to."  Where, 
of  two  co-owners  of  a  ship,  partners  in  the  business  of  trading  and 
carrying,  one  of  them  availed  himself  of  his  being  master  of  the 
ship  to  trade  on  his  own  account  also,  he  was  required  to  share  the 
profits  thus  made,  just  as  if  they  had  been  intended  for  the  part- 
nership,^* although  the  master  claimed  that  he  had  used  only  his 
private  capital  in  earning  them. 

But  there  is  no  restraint  upon  a  partner's  right  to  engage  in  a 
business  in  all  respects  distinct  from  that  of  the  partnership,  and 
to  enjoy  alone  the  profits  of  it;  and  this,  so  Lindley  says,*'  "even 
if  he  has  agreed  not  to  carry  on  any  separate  business." 

RIGHT  TO  COMPENSATION  FOR  SERVICES. 

70.  Unless   otherwise  agreed,  a  partner's  services  for  his 

firm  do  not  call  for  compensation. 

In  order  that  a  partner  may  exact  payment  from  the  firm  for  any 
services  done  by  him  on  its  behalf,  there  must  have  been  some  agree- 

«»  1  Lindl.  Partn.  310. 
»8  Gardner  v.  M'Cutcheon,  4  Beav.  534. 

»T  Lindl.  Partn.  p.  312;  Russell  t.  Austwick,  1  Sim.  62;  Miller  t.  Mackay,  84 
Beav.  295. 


1C6  IMI'LIED    BIGHTS    AND    LIABILITIES    INTER   8E.  (Ch.   4 

nient  between  the  partners  entitling  him  to  compensation."  And, 
without  agreemt'ut  of  this  kind,  he  has  generally  no  right  to  com- 
pensation, even  though  he  maj  have  been  more  active  than  his  co- 
partners in  pushing  the  enici  prise  in  which  they  are  all  concerned 
as  partners,  unless  such  a  difference  in  extent  or  importance  be- 
tween the  several  services  of  the  partners  was  clearly  not  contem- 
plated by  the  latter  previously;^*    for  if  one  partner,  while  bound, 

88  Thompson  v.  Noble  (Mich.)  Go  N.  W.  563;  Denver  v.  Koane,  99  U.  S.  355; 
Godfrey  v.  White,  43  Mich.  171,  5  N,  W.  243;  Chamberlain  t.  Sawyers  (Ky.)  32 
S.  W.  475.  It  is  the  duty  of  partners  to  devote  their  time  to  carrying  on  the 
firm  business,  and,  in  the  absence  of  special  agreement,  they  are  not  entitled  to 
compensation  therefor.  Insley  v.  Shire,  54  Kan.  793,  39  Pac.  713.  A  provision 
in  partnership  articles  that  the  salaries  of  the  members  shall  not  be  considered  as 
losses  sustained  by  the  business,  entitles  a  partner  to  his  salary  unconditionally. 
Keiley  v.  Turner,  81  Md.  209,  31  Atl.  700.  Articles  of  partnership  prescribed 
three  years  for  the  continuance  of  the  firm,  and  provided  salaries  for  the  members. 
The  partnership  continued  after  that  time  without  lew  articles,  and  the  partners 
subsequently  ceased  to  mai^e  entries  of  salaries  on  the  firm's  books.  Held  that,  in 
settling  the  firm  accounts,  the  members  are  not  entitled  to  salaries  after  the  last 
entry  thereof.  Id.  Articles  of  partnership  provided  that  one  partner  should  re- 
ceive $450  per  month  as  salary,  the  second  $300,  and  the  third  nothing.  The  first 
and  third  partners  agreed  that  the  latter  should  draw,  and  have  charged  to  him 
on  the  partnership  books,  $150  per  month  of  the  former's  salary.  Held  that,  in 
settling  the  firm  accounts,  the  former  is  entitled  to  but  $;?00  per  month  as  against 
the  firm  assets,  his  recourse  for  the  balance  being  against  the  third  partner.  Id. 
See,  also.  Smith  v.  Knight,  88  Iowa,  257,  55  N.  W.  189.  P.  and  C.  were  partners, 
each  owning,  as  between  themselves,  a  half  interest,  under  articles  re«iuiriug  eadi 
to  devote  all  his  time  to  the  firm  business,  for  which  he  should  receive  no  com- 
pensation save  his  share  of  the  profits.  As  between  plaiutiCf  and  C,  however, 
plaintiff  owned  a  certain  interest  in  C.'s  half  interest.  Held  that,  as  against  plain- 
tiff, C.  was  not  entitled  to  compensation  for  his  services  in  the  business,  there  be- 
ing no  agreement  between  them  therefor.  Eckert  t.  Clark,  14  Misc.  Rep.  18, 
35  N.  Y.  Supp.  118.  See,  also.  Keiley  v.  Turner,  81  Md.  2G9,  31  Atl.  700. 
Where  a  partnership  contract  provided  that  each  member  was  to  render  services, 
and  it  appeared,  on  a  settlement,  that  one  partner  had  furnished  all  the  capital, 
and  had  exercised  complete  management  and  control  over  the  firm  affairs,  it  was 
proper  to  allow  him  credit  for  his  services.  Mattingly  v.  Stone's  Adm'r  (Ky.)  35 
S.  W.  921. 

88  Dunlap  V,  Watson,  124  Mass.  305;  Beatty  t.  Wray,  19  Pa.  St.  516;  GIl- 
hooly  V.  Hart,  8  Daly  (N.  Y.)  176;  Franklin  v.  Robinson,  1  Johns.  Ch.  (N.  Y.) 
157;  Caldwell  v.  Leiber,  7  Paige  (N.  Y.)  483;  Drew  v.  Person,  22  Wis.  651; 
Heath  v.  Waters,  40  Mich.  457;  King  v.  Hamilton,  16  111.  190.  A  partner  can- 
not recover  of  the  firm  for  the  value  of  services  rendered  to  It  In  excess  of  the 


§    70)  RIGHT    TO    COMPENSATION    FOB    SERVICES.  1G7 

under  the  terms  of  their  contract,  to  co-operate  with  the  other, 
purposely  neglects  the  business,  leaving  it  to  the  care  altogether  of 
his  co-partner,  the  latter  is  entitled  to  something  more  than  his  mere 
proportion  of  profit*"  "VMiere  it  has  been  expressly  agreed  between 
the  partnere  that  one  of  them  is  to  receive  compensation  for  giving 
his  personal  attention  to  the  business,  the  person  thus  agreed  to  be 
compensated  may  enforce  his  demand  for  compensation,  after 
having  earned  it,  against  the  others.*^  But,  even  where  there  has 
been  no  such  agreement,  a  surviving  partner,  who  gives  the  business 
the  beuelit  of  his  personal  attention  after  dissolution  of  the  partner- 
ship is,  in  England,  entitled  to  compensation,**  unless  there  is  some 
reason  why  he  should  serve  without  compensation, — if,  for  instance, 
he  is  the  executor  of  the  deceased  partner,*^  or  is  the  co-partner  of 
a  person  who  has  become  insane,  on  account  of  whose  insanity  the 
dissolution  has  been  decreed.**  In  the  United  States,  however,  by 
the  weight  of  authority,  a  liquidating  partner  is  not  entitled  to  com 
pensation  for  services  performed  in  winding  up,  unless  there  is  a 
provision  in  the  partnership  articles  for  compensation  for  such 
services.*"     An   agreement   to  compensate  a   partner   for   services 

exteut  of  services  rendered  by  his  co-partner,  in  the  absence  of  special  agreement. 
Hecknrd  v.  Fay,  57  111.  App.  20.  Where  one  member  of  a  law  firm  renders 
services  for  the  estate  of  which  his  partner  is  the  CAecutor,  at  his  reciucst,  such 
services  are  not  within  the  partnership  business,  and  the  executor  is  liable  to  him 
for  compensation  therefor.  But  services  rendered  by  a  lawyer,  at  the  request  of 
his  partner,  to  an  estate  of  which  the  partner  is  executor,  will  be  held  to  have 
been  performed  for  the  lienefit  of  the  firm,  where  payments  on  account  of  such 
services  were  entered  on  the  books  as  partnership  funds,  and  divided  between  the 
I)artners.  and  the  executor  is  not  liable  on  account  of  such  services.  9  Misc. 
Kep.  298.  ;W  N.  Y.  Supp.  2G7,  reversed.  Parker  v.  Day,  12  Misc.  Rep.  510,  33 
N.  Y.  Supp.  G7G. 

*o  Denver  v.  Roane,  99  U.  S.  335;  Marsh's  Appeal,  69  I'a.  St.  30;  Airey  v.  Bor- 
ham,  29  Beav.  620. 

41  Paine  v.  Thacher,  25  Wend.  (N.  Y.)  4.50. 

**  1  Lindl.  Partn.  381,  citing  Featherstonhaugh  v.  Turner,  25  Beav.  382;  BrowD 
V.  De  Tastet,  Jac.  2S4;   Crawshay  v.  Collins,  2  Russ.  347. 

4  3  Featherstonhaugh  v.  Turner,  25  Beav.  382. 

**  Mellersh  v.  Keen,  27  Beav.  242. 

4  8  Denver  v.  Roane,  99  U.  S.  355,  359;  Dunlap  t.  Watson,  124  Mass.  305; 
Washburn  t.  Goodman,  17  Pick.  (Mass.)  519;  Schenkl  v.  Dana,  118  Mass. 
236;    Coursen  v.  Hamlin,  2  Duer  (N.  Y.)  513;    Burgess  v.  Badger,  82  Hun,  488. 


1G8  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

may  be  implied.  "Where  it  can  be  fairly  and  justly  implied,  from 
the  course  of  dealing  between  the  partners,  or  from  circumstances 
of  equivalent  force,  that  one  partner  is  to  be  compensated  for  his 
services,  his  claim  will  be  sustained."  *• 

RIGHT  TO  INTEREST  ON  BALANCES. 

71.  On  an   accounting  between   partners,  interest  should 

not  be  allowed,  in  the  absence  of  agreement,  upon 
advances,  overdrafts,  or  undivided  profits  allowed 
to  remain  in  the  business. 

72.  Interest  should  be  charged  upon  the  amount  of  an  un- 

paid subscription  to  capital,  and  wherever  there  is 
an  express  or  an  implied  agreement  to  pay  it. 

There  ia  considerable  confusion  and  conflict  in  the  cases  upon 
the  right  to  interest  upon  balances  found  due  upon  a  partnership 
accounting.  Indeed,  it  has  been  frequently  said  that  the  allowance 
or  disallowance  of  interest  in  talcing  partnership  accounts  depends 
upon  the  circumstances  of  each  particular  case,  and  cannot  be  gov- 
erned by  any  fixed  rules.*^  There  is  probably  no  question  in  Eng- 
lish law  upon  which  the  cases  are  in  greater  conflict  than  they  are 
upon  the  question  of  interest.  It  is  believed,  however,  that  the  rules 
stated  above  will  be  found  based  on  sound  principles,  and  supported 
by  the  weight  of  authority.  Interest  is  allowed  only  on  one  of  two 
grounds:  Where  there  is  a  contract  to  pay  interest,  it  is  recover- 
able because  it  is  a  debt.  Where  there  has  been  a  default  in  pay- 
ing money  at  the  time  it  was  due,  interest  is  allowed  as  damages 
for  the  delay.*"  Examining  the  question  under  consideration  in 
the  light  of  these  two  principles,  the  following  conclusions  seem 
justifiable: 

31  N.  Y.  Supp.  614;  Loomis  v.  Armstrong,  49  Mich.  521,  14  N.  W.  505;  Kimball 
V.  Lincoln,  5  111.  App.  316;  Brown's  Appeal,  89  Pa.  St.  139;  Beatty  ▼.  Wray,  19 
Pa.  St.  516. 

46  Emerson  r.  Durand,  64  Wia  111,  118,  24  N.  W.  129,  and  54  Am.  Rep.  593. 

47  Buckingham  v.  Ludlum,  29  N.  J.  Eq.  350;    Gyger's  Appeal,  62  Pa.  St  79; 
Johnson  v.  Hartshorne,  52  N.  Y.  173. 

48  Hale,  Dam.  144. 


§§   71-72)  RIGHT    TO    INTEREST    ON    BALANCES.  169 

Interest  cannot  be  recovered  upon  contributions  to  capital,  in  the 
absence  of  express  contract.  No  contract  to  pay  interest  can  be 
implied,  because  the  fair  inference  is  that  the  contributions  of  the 
partners  balance  each  other,  and  each  receives  compensation  in  his 
share  of  the  profits.  Interest  cannot  be  given  as  damages,  because 
there  has  been  no  default, — no  wrong  for  which  damages  can  be 
awarded.*' 

Where,  however,  a  partner  has  failed  to  pay  in  the  full  amount 
of  his  agreed  contribution  to  the  capital,  interest  will  be  allowed 
against  him  on  the  amount  of  the  unpaid  balance,  as  damages,  be- 
cause he  is  in  default  in  not  paying  the  money  when  it  was  due."^" 

Interest  will  not  be  allowed  upon  advances,  overdrafts,  or  undi- 
vided profits,  in  the  absence  of  an  agreement,  express  or  implied, 
to  that  effect;  1.  e.  it  will  not  be  allowed  as  damages.  The  reason 
for  this  is  very  clear.  It  is  because  there  has  been  no  default  for 
which  damages  can  be  awarded.  As  a  general  rule,  there  is  no 
duty  to  pay  money  until  the  amount  to  be  paid  is  ascertained;  and 
there  can  be  no  default,  therefore,  unless  the  amount  is  liquidated, 
or  it  is  the  debtor's  fault  that  it  is  not  liquidated.  Undivided  prof- 
its are  not  payable  until  there  has  been  an  accounting  and  a  set- 
tlement There  can  be  no  default,  therefore,  in  not  paying  them 
sooner,  and  consequently  interest  cannot  be  allowed  as  damages." 

*o  Moss  V.  McCaU,  75  111.  190;  Gilhooly  v.  Hart,  8  Daly  (N.  Y.)  176;  Bradlo.v 
V.  Brisham,  137  Mass.  545;  Whitcomb  t.  Converse,  119  Mass.  38;  Brown's  Ap 
peal,  89  Pa.  St.  139;  Cooke  v.  Benbow,  3  De  Gex,  J.  &  S.  1.  But  see  Lloyd 
T.  Carrier,  2  Lans.  (N.  Y.)  3G4;  Wells  v.  Babcock,  56  Mich.  276,  22  N.  W.  809, 
and  27  N.  W.  575;  Pratt  v.  McHatton,  11  La.  Ann.  260.  Interest  is  not  recov- 
erable on  an  excess  of  capital  contributed  to  a  partnership  by  one  partner  on  the 
ground  that  he  devoted  his  time  and  money  to  carrying  on  the  partnership  business, 
whereas  the  other  partner  contributed  nothing  in  the  way  of  time  or  labor.  Thomp- 
son V.  Noble  (Mich.)  65  N.  W.  563. 

60  Ligare  v.  Peacock,  109  111.  94;  Hartman  v.  Woehr,  18  N.  J.  Eq.  383;  Reyn- 
olds V.  Heirs,  etc.,  17  Ala.  32;  Krapp  v.  Aderholt,  42  Kan.  247,  21  Pac.  1033. 
But  see  Stokes  v.  Hodges,  11  Rich.  Eg.  (S.  C.)  135;  Montague  v.  Hayes,  10 
Gray  (Mass.)  609. 

Bi  Gilman  v.  Vaughan,  44  Wis.  646;  Sweeney  v.  Neely,  53  Mich.  421,  19  N. 
W.  127;  Moss  v.  McCall,  75  111.  190;  Gage  v.  Parmelee,  87  111.  329;  Brown's 
Appeal,  89  Pa.  St.  139;  President,  etc.,  of  Rensselaer  Glass  Factory  ▼.  Reid,  5 
Cow.  (N.  Y.)  587;    Bowling's  Heirs  t.  Dobyns'  Adm'r,  5  Dana  (Ky.)  434;    Buck 


170  IMPLIl-;iJ    lllGilTS    AND    LIABILITIES    INTER    SE.  (Ch.    4 

For  a  similar  reason,  interest,  as  damages,  is  not  allowed  upon  ad- 
vances, or  charged  upon  overdrafts.^^  Such  transactions  simply  con- 
stitute items  in  the  account  between  the  partners  making  them  and 
the  firm.  They  are  not  isolated  acts.  Until  an  accounting,  it  can- 
not be  known  whether  the  partner  is  a  creditor  or  a  debtor.^*  It 
seems  reasonably  clear,  therefore,  that,  in  all  this  class  of  cases, 
interest  cannot  be  allowed  as  damages. 

Interest  is  allowed  on  advances,  overdrafts,  and  unwithdrawn 
profits,  as  a  part  of  the  debt,  whenever  there  is  a  contract  to  pay 
it    This  contract  may  be  either  express  or  implied."**     The  principal 

iugham  v.  Lmiluui,  29  N.  J.  Eq.  345;  Dexter  v.  Arnold,  3  Mason,  284,  Fed.  Cas. 
No.  3,855. 

B2  T.  Pars.  I'artn.  §  417;  Lee  v.  Lasbbrooke,  8  Dana  (Ky.)  214;  Prentice  ▼. 
Elliott,  72  Ga.  154;  Clark  v.  Wordeu.  10  Neb.  87,  4  N.  W.  413.  An  advauce- 
meut  or  loan  bj*  a  partner  to  a  firm  bears  interest.  Matthews  v.  Adams  (Md.)  35 
Atl  60.  Where  a  partner  advances  his  own  funds  to  meet  firm  obligations,  he  is 
entitled,  on  an  accounting  with  his  co-partners,  to  be  credited  with  interest  from  the 
date  of  the  advancement.  Coldren  v.  Clark  (Iowa)  Gl  N.  W.  1045.  Where  a 
partner  left  the  monthly  installments  of  his  salary  in  the  bauds  of  the  firm,  to 
be  used  for  its  benefit,  in  settling  the  partnership  accounts  he  is  entitled  to  interest 
on  the  several  installments  from  the  time  each  became  payable  to  him.  Keiley  v. 
Turner  (Md.)  31  Atl.  700. 

68  Miller  v.  Lord,  11  Pick.  (Mass.)  11;  Lee  v.  Lasbbrooke.  8  Dana  (Ky.)  214; 
Godfrey  v.  White,  43  Mich.  171,  5  N.  W.  243;  Prentice  v.  Elliott,  12  Ga.  154. 
After  disssolution  of  a  partnership,  and  prior  to  the  settlement,  one  partner  is  not 
entitled  to  interest  from  the  other  partners  on  undetermined  balances  in  his  favor. 
Ashbrook  v.  Ashbrook  (Ky.)  28  S.  W.  600.  Where  a  partner  failed  to  seek  an 
accounting  until  after  the  lapse  of  15  to  20  years,  and  the  means  of  showing  the 
true  state  of  the  account  have  been  lost,  equity  will  not  allow  him  to  recover  in- 
terest on  the  balance  due  him.  Smith  v.  Smith,  18  R.  I.  722,  30  Atl.  602.  See, 
also,  Atherton  v.  Whitcomb,  0(5  Vt.  447,  29  Atl.  674;  Daniels  v.  McCormick,  87 
Wis.  255,  58  N.  W.  406;  Smith  v.  Knight,  88  Iowa,  257,  55  N.  W.  189. 

64  Lloyd  V.  Carrier,  2  Lans.  (N.  Y.)  364;  Payne  v.  Freer,  91  N.  Y.  43;  Baker 
V.  Mayo,  129  Mass.  517;  Montague  v.  Hayes,  10  Gray  (Mass.)  009;  Bradley  v. 
Brigham;  137  Mass.  545;  Wells  v.  Babcock,  56  Mich.  276,  22  N.  W.  809,  and  27 
N.  W.  575;  Emerson  v.  Durand,  64  Wis.  Ill,  24  N.  W.  129;  Morris  v.  Allen,  14 
N.  J.  Eq.  44;  Coddington  v.  Idell,  29  N.  J.  Eq.  504.  The  partnership  may  be  Ha- 
ble  for  interest  to  one  partner  who  makes  advances  for  or  to  the  firm,  where  there 
is  a  special  contract  to  that  effect,  or  where  it  may  be  implied  from  the  facta  and 
circumstances  that  the  firm  was  to  pay  interest  for  such  advances;  otherwise, 
the  partner  will  not  be  ontitlod  to  interest  for  such  advances  or  payments,  but  the 
liability  of  the  firm   will   be   by  account.    Prentice  t.   Elliott,   72  Ga.    154.    The 


§    73)  RIGHT    TO    INDKM.NITY    AND    CONTRIBUTION.  171 

difficulty  is  in  determining  when  such  a  contract  will  be  implied. 
It  is  apprehended  that  the  judges  and  text  writers,  when  they  say 
that  the  question  of  interest  cannot  be  determined  by  any  rule  of 
law,  but  depends  solely  upon  the  facts,  mean  no  more  than  that  no 
fixed  rule  can  be  laid  down  as  to  when  a  contract  to  pay  interest 
will  be  implied.  This  does,  indeed,  depend  on  the  facts  of  eaeh 
particular  case.  It  may  be  implied  from  a  course  of  dealing  be- 
tween the  partners, — as,  for  instance,  a  long-continued  custom  to 
allow  interest  on  advances."' 

RIGHT  OF  PARTNER  TO   INDEMNITY  AND  CONTRIBUTION. 

73.  Every  partner  is  entitled  to  be  indemnified  in  account 
■writh  the  firm  for  payments  made  and  for  personal 
liabilities  incurred  by  him 

(a)  In  the  ordinary  and  proper  conduct  of  the   business 

of  the  firm. 

(b)  In  or  about  any  tiling  necessarily  done  for  the   pres- 

ervation of  the  business  or  property  of  the  firm. 

period  of  the  dissulution  of  the  partnership  is  the  proper  time  to  make  a  rest,  and 
adjust  the  accounts,  and  the  partner  against  whom  the  balance  is  found  is  charge- 
able with  interest.  Andrews  v.  Andrews,  3  Bradf.  Sur.  (N.  Y.)  101;  Johnson  v. 
Hai-tshorne,  52  N.  Y.  178.  As  a  general  rule,  interest  is  not  allowed  upon  part- 
nership accounts  until  after  a  balance  is  struck  on  a  settlement  between  the  part- 
ners, unless  the  parties  have  otherwise  agreed  or  acted  in  their  partnership  con- 
cerns. Gilman  v.  Vaughan,  44  Wis.  649;  Dexter  v.  Arnold,  3  Mason,  284,  Fed. 
Gas.  No.  3,855;  Lee  v.  Lashbrooke,  8  Dana  (Ky.)  214;  Day  v.  Lock  wood,  24 
Conn.  185;  Desha  v.  Smith,  20  Ala.  747;  Whitcoinb  v.  Convei-se,  119  Mass.  38; 
Beacham's  Assignees  v.  Eckford's  Ex'rs,  2  Sandf.  Ch.  (N.  Y.)  116,  7  N.  Y.  Ch. 
(Lawy.  Ed.)  531.  Interest  will  not  be  allowed  to  a  member  of  a  partnership  on  ad- 
vances and  unwithdrawn  profits  left  with  the  firm  unless  it  is  provided  for  in  the 
partnership  articles,  or  is  in  accordance  with  the  understanding  of  the  parties. 
Winchester  v.  Glazier  (Mass.)  25  N.  E.  728. 

66  See  Eddowes  v.  Hopkins,  1  Doug.  376;  Selleck  v.  French,  1  Conn.  32;  Moore 
T.  Voughton,  1  Starkie,  487.  Where  the  only  agreement  between  partners  shown 
is  that  one  is  to  have  a  fifth  of  the  profits  and  a  fifth  of  the  losses,  the  fact  that, 
in  making  up  previous  accounts  between  them,  the  other  had  been  credited  with 
interest  on  his  capital,  is  not  sufficient  evidence  of  usage  to  dispense  with  jxrool 
of  a  special  agreement  therefor.    Id  re  James,  40  N.  E.  876,  146  N.  Y.  7& 


172  IMPLIED    RIGHTS    AND    LIABILITIES    LNTEB    SE.  (Ch.  4 

Generally  speaking,  every  partner  is  the  agent  of  the  fii  m  for 
the  conduct  of  its  business,  and,  as  such,  is  entitled  to  indemnity, 
on  the  ordinary  principles  of  the  law  of  agency."  But  the  rights 
of  a  partner  to  contribution  go  beyond  this.  He  may  chaige  the 
firm  with  moneys  necessarily  expended  by  him  for  the  preservation 
or  continuance  of  the  partnership  concern.'^  This  right  must  be 
carefully  distinguished  from  the  power  of  borrowing  money  jn  the 
credit  of  the  firm,  of  which  it  is  altogether  independent."*'  It  arises 
only  where  a  j)artner  has  incurred  expense  which,  under  tlie  cir- 
cumstances, and  having  regard  to  the  nature  of  the  business,  was 
absolutely  necessiiry,  and  the  firm  has  had  the  benefit  of  such  ex- 
pense,"'  as  where  the  advances  are  made  to  meet  immediate  debts 
of  the  firm  (which  is  the  most  frequent  case),"*  or  to  pay  the  cost  of 
operations  without  which  the  business  cannot  go  on,  such  as  sink- 
ing a  new  shaft  when  the  original  workings  of  a  mine  are  cxhaust- 

»•  Thomas  T.  Athorton.  10  Ch.  Div.  185;  Spottiswoode's  Case,  6  De  Gex,  M. 
h  G.  345;  Robinson's  Ex'rs  Case,  Id.  672;  Lefroy  t.  Gore,  1  Jones  &  L.  571; 
Bury  V.  Allen,  1  Colly.  Gut. 

»T  Harvey  v.  Vamey,  104  Mass.  430;  King  t.  Hamilton,  16  111.  100;  Stepinan 
V.  Berryhill,  72  Mo.  307;  Savage  v.  Carter,  0  Dana  (Ky.)  408;  Coddington  t.  Idell, 
29  N.  J.  Eq.  504;  Ex  parte  Chipptudale,  4  De  Gex,  M.  &  G.  ID;  Burdon  v. 
Barkus,  4  De  Gex,  F.  &  J.  42. 

0  8  See  post,  p.  21iS,  and  Ex  parte  Chippendale,  4  De  Gex,  M.  &  G.  3."»,  40. 

»»  Godfrey  v.  White,  43  Mich.  171,  5  N.  W.  243;  Bodes  t.  Rodes,  6  B.  Mon. 
(Ky.)  400;  Zimmerman  v.  Hubor,  20  Ala.  370.  There  is  no  ripht  to  contribution 
for  unni'cessary  expeudituros.  Mt'sorve  v.  Andrews,  lOG  Mass.  410;  Lee's  Ex'x 
V.  Dolan'H  Adm'x,  39  N.  J.  Eq.  193;  Tomlinson  t.  Ward,  2  Coun.  30ti. 

«o  Wheeler  v.  Arnold,  30  Mich.  304;  Downs  v.  Jackson,  33  111.  4G5;  Brown  t. 
Agnew,  G  Watts  &  S.  (Pa.)  235;  Noel  v.  Bowman,  2  Litt.  (Ky.)  4G;  Dakin  ▼. 
Graves,  48  N.  H.  45;  Ex  parte  Williamson,  5  Ch.  App.  300;  Olleman  t.  Reagan's 
Adm'r,  28  Ind.  100.  But  see  Phillips  v.  Blatchford.  137  Mass.  510.  A  partner 
who  takes  exclusive  possession  and  control  of  the  assets  of  the  firm  on  its  disso- 
lution, and  undertakes  to  close  up  the  business,  is  not  entitled  to  contribution  from 
a  partner  for  firm  debts  paid  by  him,  without  making  a  settlement  of  partnership 
accounts.  Smith  v.  Zumbro  (W.  Va.)  24  S.  E.  653.  A  note  was  given  by  a  firm. 
On  dissolution  of  the  firm  by  arbitration,  in  which  the  note  was  expressly  ex- 
cluded, one  partner  assumed  all  its  liabilities,  retaining  the  assets,  and  was  re- 
quired to  pay  the  note.  Held  that,  if  the  note  was  a  firm  liability,  he  could  not 
recover  one-half  the  amount  so  paid  from  his  co-partner.  Neal  t.  Berry,  86  Me. 
193,  29  Atl.  987.    See,  also,  Compton  t.  Thorn,  90  Va.  653,  19  S.  B.  451. 


§    73)  RIGHT    TO    INDEMNITY    AND    CONTRIBUTION.  173 

ed.®^  If,  in  the  presence  of  some  such  urgent  necessity  that  money 
shall  be  paid  for  the  firm's  benefit,  one  partner  comes  forward  and 
expends  his  own  private  means  to  that  end,  the  right  accrues  to 
him,  immediately,  that  the  other  partners  shall  reimburse  him,  so 
that  the  whole  eventual  loss  to  the  partner  paying  shall  be  equal 
to  what  would  have  been  his  proportion  of  loss  if  all  had  paid,  in- 
stead of  him  only.  But  it  is  not  to  be  inferred  from  this  that  neces- 
sarily each  partner  must  pay  merely  according  to  his  share  in  the 
partnership,  because  some  one  or  more  partners  miglit  not  be  able 
to  pay  at  all,  in  which  case  the  first  person  above  mentioned  would 
sustain  a  loss  proportionate  to  the  joint  shares  of  himself  and  those 
unable  to  pay.**  This  right  is  called  the  "right  to  contribution." 
Although  it  is  often  expressly  recognized  in  the  articles  of  partner- 
ship, it  exists  without  regard  to  the  contract,  as  one  of  the  inci- 
dents of  the  relation.  But  if  the  articles  of  some  particular  part 
nership  contain  an  express  stipulation,  or  if  it  can  be  shown  that 
there  was  an  understanding,  tacit  or  otherwise,  between  the  part- 
ners, to  the  contrary  effect,  in  that  partnership  there  is  no  right  to 
contribution.  In  no  case,  either,  has  a  partner  such  a  right  as  to 
another  partner  whom  he  has,  by  his  own  fraud  or  misrepresenta- 
tions, enticed  into  the  firm  membership;  for  the  person  so  enticed 
is  in  a  position  to  withdraw  from  the  partnership  agreement,  and  is 
not  liable  for  losses  of  the  firm  that  it  brought  into  being.'^  Prima 
facie,  however,  all  losses  or  expenditures  for  the  firm  are  to  be 
equally  borne  by  all  the  partners."* 

•  1  Burdon  t.  Barkus,  4  De  Gex.  F.  &  J.  42.  .51.  See  Ex  parte  Williamson,  5 
Ch.  App.  309,  313.  A  payment  by  one  partner  of  money  in  excess  of  bis  share  of 
the  capital,  not  derived  from  partnership  profits,  when  it  was  necessary  to  be 
paid  to  preserve  the  partnership  property  and  carry  on  the  business,  constitutes  a 
preferred  claim  on  the  partnership  property,  which  must  be  paid  before  there  can 
be  any  surplus  found  to  be  divided  among  partners.  Matthews  v.  Adams  (Md.) 
35  Atl.  GO. 

82  McKc'wan's  Case,  6  Ch.  Div.  447;  Hole  v.  Hurrison,  1  Ch.  Cas,  24(5;  Wade- 
eon  V.  Richardson,  1  Ves.  &  B.  103.  And  see  Dering  v.  Elarl  of  VVinchelsea,  1 
Cox,  Ch.  318;  Poter  v.  Rich,  Rep.  Ch.  19. 

«3  Rawlins  v.  Wickham,  1  Giff.  355;  Newbigging  ▼.  Adam,  34  Ch.  Dlv.  582" 
Pillans  V.  Rarkness,  Colles,  442. 

«*  See  ante,  p.  IIG. 


174  IMPLIED    RIGHTS    AND    LIABILITIES    I^TER    SE.  (Ch.   4 

Limit  as  to  Amount  of  Contrlhutlon. 

The  total  amount  recoverable  is  not  necessarily  limited  by  the 
nominal  capital  of  the  partnership,  for  the  expenditure  on  exist- 
ing undertakings  cannot  be  measured  by  the  extent  of  the  cap- 
ital.** On  the  other  hand,  the  limit  of  contribution  may  be  fixed 
beforehand,  by  express  agreement  among  the  members  of  a  ilrm; 
and  in  that  case  no  partner  can  call  upon  the  others  to  exceed  it, 
however  great  may  have  been  the  amount  of  his  own  outlay  on 
behalf  of  the  firm."  This  has  nothing  to  do  with  the  obligations 
of  the  partners  to  third  persons,  and  accordingly  does  not  affect  the 
rule  that  "as  to  the  rest  of  the  world,"  unless  the  particular  cred- 
itor has  agreed  to  look  only  to  some  particular  fund,  "each  partner 
is  liable  for  the  whole  amount  of  the  debts  of  the  partnership."  '^ 

Advances  not  Considered  Voluntary  Payments. 

An  outlay  made  by  one  partner,  in  any  such  emergency  aa  has 
been  suggested  above,  does  not  ever  fall  within  the  law  as  to 
"volnulary  payments."  by  which  law  any  money  paid  by  an  in- 
dividual for  another's  advantage,  without  being  requested  or  com- 
pelled to  do  so,  cannot  be  recovered  back  from  the  beneficiary; 
and  the  reason  why  this  is  so  is  that  in  the  case  of  the  outlay  by 
the  partner  the  benefit  accrues  to  the  partner  making  it,  as  well 
as  to  his  co-partners  who  are  called  upon  subsequently  to  contribute 
to  make  his  outlay  good  to  him  proportionately." 

Right  to  Contribution  When  the  Outlay  Concerns  an  Illegal  Act. 

No  right  of  contribution  exists  in  favor  of  a  partner  who  has 
been  put  to  loss  through  a  pronounced  illegal  act, — a  tort,  in  con- 
tradistinction to  a  mere  transcending  of  powers, — in  which  all  the 

6B  Ex  parte  Chippendale,  4  De  Gex,  M.  &  G.  42. 

6«  In  re  Worcester  Corn  Exchange  Co.,  3  De  Gex,  M.  &  G.  180.  A  partner- 
ship agreement  required  the  profits  and  losses  to  be  shared  equally  by  the  four 
partners,  "provided,  however,  that"  one  partner,  who  furnished  all  the  cash  capital, 
should  "in  no  event  be  put  to  a  loss  more  than  $1,250,  and  the  balance"  should  "be 
made  up  and  paid  to  him  in  case  of  greater  loss  by  the  other  parties."  Held,  that 
the  loss  of  said  partner  in  excess  of  $l,2r)0  was  a  joint  and  several  liabihty  of 
the  others.     Magilton  t.  Stevenson,  173  Pa.  St.  560,  34  Atl.  235. 

•■J  See  post,  p.  '_'4'J. 

•  «  See  1  Colly.  Partn.  §§  320,  324;  Edminston  v,  Wright,  1  Camp.  88;  Stokes  t. 
r.ewis,  1  Term  R.  20;  Child  v.  Morley,  8  Term  R.  010. 


§    '  '^)  RIGHT    TO    INDEMNITY    AND    CONTRIBUTION.  175 

partners  participated,  himself  included,"*  although,  if  such  act  was 
a  breach  of  trust,  and  one  partner  made  good  the  default  out  of 
his  private  means,  the  right  would  accrue  to  him.^°  Pollock  tells  " 
us  that  as  between  joint  wrongdoers  themselves,  where,  from  the 
very  nature  of  the  act  out  of  which  the  suit  arose,  the  partner  sued 
alone,  and  compelled  to  pay  the  whole  damages,  must  be  presumed 
to  have  known  it  was  illegal  at  the  time,  no  right  to  indemnity  or 
contribution  from  the  other  accrues  to  him,  but  that  when  the  mat- 
ter is  indifferent  in  itself,  and  the  wrongful  act  is  not  clearly  illegal, 
but  may  have  been  done  in  honest  ignorance,  or,  in  good  faith,  to 
determine  a  claim  of  right,  there  is  no  objection  to  contribution  or 
indemnity  being  claimed. 

Bighf  to  Cmitrlhution.  Where  Partner  hm  AJone  Become  Bound. 

If  a  partner  acts  for  the  firm,  within  the  scope  of  its  business,  and 
within  his  authority  as  a  partner,  but  in  such  a  way  that  liability 
for  his  act  attaches  to  him  alone,  he  is  entitled  to  contribution  from 
his  co-partners  for  any  loss  thereby  occasioned  him;  ^*  and  if  he  has. 
with  the  knowledge  and  consent  of  his  co-partners,  defended  an 
action  brought  upon  such  an  act  of  his,  and  has  so  incurred  expense 
for  costs  and  attorney's  fees,  he  is  entitled  to  be  compensated  in  the 
same  manner  for  the  expense  so  incurred,  as  well  as  for  any  dam- 
age that  may  be  adjudged  against  him  in  the  action." 

Right  to  Contribution  When  Loss  was  Due  to  Partner's  Own  Default. 
When  the  loss  for  which  the  partner  would  have  contribution  was 
the  result  of  his  own  fraud,  negligence,  or  want  of  skill,  or  when 
he  incurred  it  while  acting  outside  of  all  authority  pertaining  to 
him  as  a  partner,  his  demand  is  without  merit,  and  will  not  be 
sustained.^* 

89  Thomas  v.  Atherton,  10  Ch.  Div.  185. 

TO  Ashhurst  v.  Mason,  L.  R.  20  Eq.  225. 

Ti  Torts,  170,  171. 

T2  Gleadow  y.  Glass  Co.,  13  Jur.  1020;  Sedgwick'^  Case,  2  Jur.  (N.  S.)  949. 

T8  Browne  t.  Gibbins,  5  Brown,  Pari.  Cas.  491;  Croxton's  Case,  5  De  Gex  & 
S.  432. 

T4  Boughner  t.  Black's  Adm'r,  83  Ky.  521;  Murphy  t.  Crafts,  13  La.  Ann.  519; 
Bury  y.  Allen,  1  Colly.  589,  604;  In  re  Webb,  2  Moore,  500;  Mcllreath  y.  Mar- 
getson.  4  Doug.  278;  Robertson  y.  Southgate,  6  Hare,  540.  Under  a  bill  for  an 
•ccounting  and  settlement  between  partners,   under  a  contract  by   which  plaintiff 


176  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.  4 

Ratification  of  Unauthorized  Act. 

But  when  a  partner  has  contracted  outside  of  his  authority,  or 
outside  of  the  scope  of  the  business,  or  otherwise,  so  that  the  firm 
would  be  justified  in  leaving  him  to  bear  alone  the  responsibility 
of  his  act,  and  all  the  partners  have  nevertheless,  with  full  knowl- 
edge of  the  facts,  accepted  the  responsibility  as  a  firm  one,  and  the 
several  accounts  of  the  partners  have  been  charged  accordingly,  an 
attempt  to  charge  the  one  partner  solely  upon  dissolution  of  the 
partnership  comes  too  late." 

When  is  the  Right  to  Contrihution  Enforceable  f 

At  law  the  right  to  contribution  is  enforceable  only  when  loss 
has  actually  been  sustained  by  the  person  complaining,"  but  in 
equity  the  prospect  of  immediate  loss  to  him  puts  him  in  a  posi- 
tion to  bring  his  suit.^^ 

DUTY  TO  CONFORM  TO  AGREEMENT. 

74.  Partners  must  conform  to  the  partnership  agreement, 
and  not  act  beyond  the  scope  of  the  partnership 
business. 

The  duty  of  partners  to  conform  their  actions  to  the  agreement  be- 
tween them,  and  to  keep  within  the  scope  of  the  partnership  busi- 
ness, is  clear.  WTiere  a  loss  is  caused  by  a  breach  of  this  duty, 
not  only  will  the  partner  guilty  of  the  breach  not  be  entitled  to 
contribution  from  his  co-partners,  but,  on  the  contrary,  he  must 
indemnify  them."  For  example,  where  a  firm  suffered  a  loss  by 
reason  of  one  partner  signing  the  firm   name  to  accommodation 

agreed  to  purchase  certain  lands,  defendants  are  entitled  to  recover  the  amount 
paid  by  them  to  an  agent  employed  to  get  the  deeds  to  the  lands,  such  employment 
having  been  made  necessary  by  the  negligence  of  plaintiff.  Morris  v.  Wood  (Tcnn. 
Ch.  App.)  35  S.  W.  1013.  See,  also,  Yorks  v.  Tozer,  59  Minn.  78,  GO  N.  W.  846; 
Smith  V.  Smith,  18  R.  I.  722.  29  Atl.  584.  and  30  Atl.  602. 

7  6  Cragg  V.  Ford,  1  Younge  &  C.  Ch.  285;  Aubert  v.  Maze,  2  Boa.  &  P.  371. 

7  8  See  Maxwell  v.  Jameson,  2  Bam.  &  Aid.  51;    Spark  v.  Healop,  1  El.  &  EL 

563. 

T7  Lacey  v.  Hill,  L.  R.  18  Eq.  182;  Hobbs  v.  Wayet,  36  Ch.  Div.  256. 

7  8  Campbell  v.  Campbell,  7  Clark  &  F.  IGG;  llobertson  v.  8outhgat«,  6  Hare, 
540,  Bury  v.  Allen,  1  Colly.  604. 


§    75)  RIGHT   TO    INFORMATION    AS    TO    BUSINESS.  177 

paper,  in  breach  of  the  partnership  agreement,  such  partner  was 
held  liable  individually  to  his  co-partners  for  the  amount  of  the 
loss.''*  So,  also,  a  partner  who  neglects  and  refuses,  without  rea- 
sonable cause,  to  perform  personal  services  which  he  has  stipulated 
to  render  the  partnership,  is  liable  to  account  to  the  firm  for  the 
value  of  tne  services,  in  the  settlement  of  the  partnership  accounts.'^ 


RIGHT  TO  INFORMATION  AS  TO  CONDUCT  OF  BUSINESS. 

76.  A  partner  has  the  right  to  be  acquainted  with  the 
manner  in  which  the  business  of  a  partnership  is 
being  conducted. 

Even  though  a  partner  may,  as  we  have  seen  above,  leave  the 
active  management  of  the  business  altogether  to  the  other  mem- 
bers of  the  firm,  he  does  not  thereby  deprive  himself  of  the  right 
to  be  informed  particularly  of  all  the  firm's  operations,  and  to 
scrutinize  all  its  acts,  to  satisfy  himself  that  good  faith  is  being 
observed  within  the  firm.  A  corresponding  duty  rests  upon  mem- 
bers of  a  partnership  to  so  manage  that  there  shall  be  no  con- 
cealment, one  from  another,  as  to  what  is  being  done  of  common 
concern."^  And  this  rule  applies  also  to  persons  who,  not  yet  be 
ing  partners,  are  negotiating  to  become  such.^^  Each  one  of  the 
partners  is  under  an  obligation  to  attend  to  the  firm's  business,  so 
far  as  it  is  given  to  him  to  attend  to  it,  zealously  and  diligently, 
and  with  due  regard  to  the  good  of  his  co-partners.*^  Lord  Eldon 
said,**  "There  is  an  implied  obligation  among  partners  to  use  the 
property  for  the  benefit  of  those  whose  property  it  is."  In  one  case 
it  was  held  that  the  failure  of  a  partner  to  notify  his  co-partners 
of  the  service  of  process  upon  him.  as  the  representative  of  the 
firm,  in  a  suit  against  the  firm,  in  which  subsequently  judgment  was 

7»  Murphy  v.  Crafts,  13  La.  Ann.  519. 
8  0  Marsh's  Appeal,  69  Pa.  St.  30. 

•1  1  Coll.r.   Partn.  §  163,  citing  Goodman  t    Whitcomb,  1  Jac.  &  W.  593,  per 
Lord  Eldon. 
8  2  Fawcett  v.  Whitehouse,  1  Russ.  &  M.  132;  Lindl.  Partn.  818. 
«»  1  Colly.  Partn.  §  132. 
•*  In  Crawshay  v.  CoUina,  16  Vea.  227. 

GEO.PART.— 12 


178  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

taken  for  plaintiff,  and  execution  issued  against  firm  property,  ren- 
dered him  liable  to  his  co-partners.** 

DUTY  TO  KEEP,  AND  RIGHT  TO  INSPECT,  ACCOUNTS. 

76.  It  is  a  partner's  duty  to  keep  correct  accounts  of  his 
transactions,  and  allow^  tliem  to  be  examined  by  his 
co-partners. 

It  is  one  of  the  clearest  rights  of  every  partner  to  have  accurate 
accounts  kept  of  all  money  transactions  relating  to  the  business 
of  the  partnership,  and  to  have  free  access  to  all  its  books  and  ac- 
counts.*" So  important  is  it  to  every  partnership  that  proper  ac- 
<'Ounts  shall  be  kept  and  be  accessible  to  all  the  partners,  that, 
whenever  any  written  articles  of  the  partnership  are  entered  into, 
clauses  are  inserted  for  the  purpose  of  removing  whatever  doubts 
there  might  otherwise  be  upon  the  subject.  It  is  the  duty  of  every 
partner  to  keep  precise  accounts,  and  to  have  them  always  ready 
lor  inspection.*^  This  duty  is  usually  devolved  upon  some  partic- 
ular partner,  or  a  clerk,  in  which  case  it  is  each  partner's  duty  to 
give  the  bookkeeper  all  necessary  information.*'  One  partner  has 
no  right  to  keep  the  partnership  books  in  his  own  exclusive  custody, 
or  to  remove  them  from  the  place  of  business  of  the  partnership.*® 
In  the  absence  of  an  express  agreement  to  the  contrary,  every  part 
uer  has  a  right,  without  the  permission  of  his  co-partners,  to  in 
spect,  examine,  and  make  extracts  from,  all  the  books  of  the  firm;  •* 

86  Devall  V.  Burbride,  6  Watts  &  S.  (Pa.)  529. 

88  Godfrey  v.  White,  43  Mich.  171,  188,  5  N.  W.  243;  Chandler  t,  Sherman,  16 
Fla.  99;  Rowe  v.  Wood,  2  Jac.  &  W.  558,  per  Lord  Eldon;  Goodman  v.  Whit- 
corab,  1  Jac.  &  W\  593.    Cf.  Vermillion  v.  Bailey,  27  111.  320. 

87  Rowe  V.  Wood,  2  Jac.  &  W.  558;  Goodman  v.  Whitcomb,  1  Jac.  &  W.  693.  . 
8  8  Knapp  V.  Edwards,  57  Wis.  191,  15  N.   W.   140;   Dimond  v.   Henderson,  47 

Wis.  172,  2  N.  W.  73;  Webb  v.  Pordyce,  55  Iowa,  11,  7  N.  W.  385;  Pomeroy  v. 
Benton,  77  Mo.  64;  Hall  v.  Clagett,  48  Md.  223;  Pierce  v.  Scott,  37  Ark,  308; 
Kelley  v.  Greenleaf,  3  Story,  105,  Fed.  Gas.  No.  7,657. 

«»  Taylor  v.  Davis,  3  Beav,  388,  note;  Greatrex  v.  Greatrex,  1  De  Gex  &.  S 
692;  Charlton  v.  Poulter,  19  Ves.  148,  note. 

0  0  Taylor  t.  Rundell,  1  Younge  &,  O.  Ch.  128;  Id-  1  Phil.  Oh.  222;  ,«tuart  t. 
Lord  Bute,  12  Sim.  460. 


§§  ll-ld)  partner's  lien.  179 

and  no  partner  can  deprive  his  co-partners  of  this  right  by  keeping 
the  partnership  accounts  in  a  private  book  of  his  own,  containing 
other  matters  with  which  they  have  no  concern.'^  At  the  same 
time,  if  a  person  entitled  to  a  share  of  the  profits  of  a  business  ex- 
pressly agrees  that  he  will  accept  the  balance  sheets  prepared  by 
others  as  correct,  and  will  not  investigate  the  books  or  accounts 
himself,  he  will  be  bound  by  that  agreement.'* 

Effect  of  Keeping  No  Books^  or  of  Destroying  Them. 

If  no  books  of  account  at  all  are  kept,  or  if  they  are  so  kept  as 
to  be  unintelligible,  or  if  they  are  destroyed  or  wrongfully  with- 
held, and  an  account  is  directed  by  a  court,  every  presumption  will 
be  made  against  those  to  whose  negligence  or  misconduct  the  non- 
production  of  proper  accounts  is  due.*^  If  all  the  persons  inter- 
ested in  the  account  are  in  pari  delicto,  this  rule  cannot  be  applied; 
but  it  is  the  duty  of  continuing  or  surviving  partners  so  to  keep 
the  accounts  of  the  firm  as  at  any  time  to  show  the  position  of 
the  firm  when  a  change  among  its  members  occurred.'* 

RIGHT  TO  HAVE  PARTNERSHIP  PROPERTY  APPLIED  TO 
PARTNERSHIP  DEBTS— PARTNER'S  LIEN. 

77.  A  partner  has   a   right  to  have  the  property  of  the 

partnership  applied  to  the  payment  of  the  partner- 
ship debts. 

78.  A  partner  has  a  right  to   have  -whatever  may  be   due 

the  firm  from  his  co-partners  deducted  from  what 
would  otherwise  be  payable  to  them  in  respect  of 
their  shares. 

79.  These  rights  are  what  is  known  as  a  "partner's  lien.'* 

81  Freeman  v.  Fairlie,  3  Mer.  43;  Toulmin  v.  Copland,  3  Younge  &  C.  655.  But 
see  Ward  v.  Apprice,  6  Mod.  264. 

»2  Tumey  v.  Bayley,  4  De  Gex,  J.  &  S.  332. 

93  Tierce  v.  Scott,  37  Ark.  308;  Walmsley  v.  Walmsley,  3  Jones  &  L.  556;  Gray 
V.  Haig,  20  Beav.  219. 

»*  Ex  parte  Toulmin,  1  Mer.  598,  note;  Toulmin  v.  Copland,  3  Younge  &  C.  655; 
Boddam  t.  Ryley,  1  Brown,  Ch.  239;  Id.,  2  Brown,  Ch.  2,  4  Brown,  Pari.  Gas.  561. 


180  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Cb.   4 

In  order  to  discbarge  himself  from  the  liabilities  to  which  a  per- 
son may  be  subject  as  partner,  every  partner  has  a  right  to  have 
the  property  of  the  partnership  applied  in  payment  of  the  debts 
and  liabilities  of  the  firm."  And,  in  order  to  secure  a  proper  di- 
vision of  the  surplus  assets,  he  has  a  right  to  have  whatever  may 
be  due  to  the  firm  from  his  co-partners,  as  members  thereof,  de- 
ducted from  what  would  otherwise  be  payable  to  them  in  respect 
of  their  shares  in  the  partnership.'* 

Foundation  of  Partner^ s  Lien. 

In  other  words,  each  partner  may  be  said  to  have  an  equitable 
lien  on  the  partnership  property,  for  the  purpose  of  having  it  ap- 
plied in  discharge  of  the  debts  of  the  firm,  and  to  have  a  similar 
lien  on  the  surplus  assets,  for  the  purpose  of  having  them  applied 
in  payment  of  what  may  be  due  to  the  partners,  respectively,  after 
deducting  what  may  be  due  from  them,  as  partners,  to  the  firm.'* 

Consequences  of  t lie  Lien. 

This  right,  lien,  quasi  lien,  or  whatever  else  it  may  be  called, 
does  not  exist,  for  any  practical  purj)ose,  until  the  affairs  of  the 
partnership  have  to  be  wound  up.  or  the  share  of  a  partner  has  to 
be  ascertained.  Nor  has  any  partner  a  right  to  insist,  as  against 
a  judgment  creditor  of  the  firm,  that  he  shall  have  recourse  to  the 
assets  of  the  firm  before  seeking  to  obtain  payment  from  the  part- 
ners individually."  But  when  partnership  accounts  have  to  be 
taken,  and  the  shares  of  the  partners  have  to  be  ascertained,  the 
lien  of  the  partners  on  the  assets  of  the  partnership,  and  on  each 
other's  shares,  becomes  of  the  greatest  importance." 

»5  See  post,  p.  413. 

»«  See  post,  p.  415. 

»7  Hoyt  V,  Sprague,  103  U.  S.  613;  Hobbs  t.  McLean.  117  U.  S.  567,  6  Sup.  Ct. 
870;  Clay  t.  Freeman,  118  U.  S.  97,  6  Sup.  Ct.  964;  Dyer  v.  Clark,  5  Mete. 
(Mass.)  562;  Pennybacker  v.  Leary,  05  Iowa,  220,  21  N.  W.  575;  West  t.  Skip,  1 
Ves.  Sr.  2.39;  Skipp  v.  Harwood,  2  Swanst.  Ch.  58(3;  Doddington  v.  Hallet,  1  Ves. 
Sr.  498;  Ex  parte  Ruffin,  6  Ves.  119;  Ex  parte  Williams,  11  Ves.  3;  Holderneas 
T.  Shackels,  8  Barn.  &  C.  612. 

8  8  See  post,  p.  249. 

•  9  1  Lindl.  Partn.  352.     And  see  post,  p.  413. 


§§    77-79)  PAKT.NERs    LIEN. 


181 


To  ^Yliat  Projpei^ty  It  Attaches, 

While  the  partnership  lasts,  the  lien  attaches  to  everything  that 
can  be  considered  partnership  property,  and  is  not,  therefore,  lost 
by  the  substitution  of  new  stock  in  trade  for  old.^"**  Further,  on 
the  death  or  bankruptcy  of  a  partner  his  lien  continues,  in  favor 
of  his  representatives  or  trustees,  and  does  not  terminate  until 
his  share  has  been  ascertained,  and  provided  for  by  the  other  part- 
ners.i°i  But,  after  a  partnership  has  been  dissolved,  the  lien  is 
confined  to  what  was  partnership  property  at  the  time  of  the  dis- 
solution, and  does  not  extend  to  what  may  have  been  subse- 
quently acquired  by  the  persons  who  continue  to  carry  on  the  busi- 
ness. In  this  respect  the  lien  in  question  differs  from  the  lien  of 
a  mortgagee  on  a  varying  stock  in  trade  assigned  to  him  as  a  se 
cuilty  for  his  loan.^°^ 
Lien  Exists  Only  on  Partnership  Assets. 

It  follows  from  the  principle  on  which  the  lien  of  a  partner  is 
founded  that  it  only  extends  to  the  property  of  the  firm,  and  to 
the  separate  interest  of  each  partner  in  such  property.^""  In  those 
cases,  therefore,  where  there  is  a  partnership  in  profits  only,  but  that 
which  produces  those  profits  belongs  exclusively  to  one  of  the  part- 
ners, the  lien  of  the  others  is  confined  to  the  profits,  and  does  not 
extend  to  that  which  produces  them.  Moreover,  if  two  persons  en- 
gage in  a  joint  adventure,  each  consigning  goods  for  sale  upon 
the  terms  that  each  is  to  have  the  produce  of  his  owti  goods,  neither 
of  them  will  have  a  lien  on  the  goods  of  the  other,  nor  on  the 
produce  of  such  goods,  although  each  may  have  raised  the  money  to 
pay  for  his  own  goods  by  a  bill  drawn  on  himself  by  the  other,  and 
ultimately  dishonored."* 

100  West  V.  Skip,  1  Ves.  Sr.  239;  Skipp  v.  Harwood  2  Swanst.  Ch.  586;  Stocken 
T.  Dawson,  9  Beav.  239,  17  Law  J.  Ch.  2S2.  The  lien  attaches  to  partnership  realty 
the  title  to  which  is  in  the  individual  name  of  one  partner.  Hiscock  v.  Phelps, 
49  N.  Y.  97;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562;  Taylor  t.  Farmer  (lU.  Sup.)  4 
N.  E.  370;  Evans  v.  Hawley,  35  Iowa,  83;  Arnold  v.  Wainwright,  6  Minn  358 
(Gil.  241). 

101  Stocken  t.  Dawson,  9  Beav.  239,  17  Law  J.  Ch.  282. 

lozpayue  V.   Hornby,  25  Beav.  280:    Nerot  v.  Burnand,  4  Ruas.  247,  2  Bligh 
(N.  S.)  215;  Ex  parte  Morley,  8  Ch.  App.  1026. 
108  Mann  v.  Higgins,  7  GiU  (Md.)  265. 
10*  Ex  parte  Gemmell,  3  Mont.,  D.  &  D.  198. 


182  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

Lien  Exists  as  against  All  Persons  Claiming  a  Share  in  the  Assets. 

The  lien  of  each  partner  exists,  not  only  as  against  the  other  part- 
ners, but  also  against  all  persons  claiming  through  them,  or  any 
of  them;  and  it  is  therefore  available  against  their  executors,  ex- 
ecution creditors,  and  trustees  in  bankruptcy.^"'  To  hold,  how- 
ever, that  this  lien  could  be  enforced  against  persons  purchasing 
jjartnership  property,  would  be,  in  effect,  to  prevent  any  sale  of 
that  property  without  the  consent  of  the  whole  firm,  and  would 
practically  stop  all  partnership  trade.  ^Miile,  therefore,  a  person 
who  purchases  a  share  of  a  partner  takes  that  share  subject  to  the 
liens  of  the  other  partners,^"'  a  person  who,  bona  fide,  purchases 
from  one  partner  specific  chattels  belonging  to  the  firm,  acquires  a 
good  title  to  such  chattels,  whatever  liens  the  other  partners  might 
have  had  on  them  prior  to  their  sale.^**^ 

Partnership  Property  Appropriated  to  Private  Uses. 

One  consequence  of  the  existence  of  this  lien  is  that  a  partner 
has  no  right  to  apply  partnership  property  to  his  own  private  uses. 
Where  he  does  so.  as  where  he  uses  it  in  payment  of,  or  as  se- 
curity for,  his  individual  debts,  the  person  with  whom  he  deals 
cannot  hold  it,  as  against  the  other  partners,  or  those  claiming 
under  them,  unless  he  can  show  that  he  is  a  bona  fide  holder  for 
value,  and  without  notice.  A  purchaser,  however,  is  not  bound  to 
see  to  the  application  of  the  purchase  money.^"" 

No  Lien  on  a  Partner's  Share  for  Ordinary  Debts  Due  from    Ilim  to 

Firm. 

The  lien  of  partners  on  the  partnership  property  extends,  as  has 
been  stated,  to  whatever  is  due  to  or  from  the  firm  by  or  to  the 
members  thereof,  as  such.  It  does  not,  however,  extend  to  debts 
incurred  between  the  firm  and  its  members,  otherwise  than  in  their 

lOB  Hoyt  V.  Sprague.  103  U.  S.  613;  Moore  v.  Huntington,  17  Wall.  417;  Hobbs 
T.  McLean,  117  U.  S.  567,  6  Sup.  Ct.  870;  West  v.  Skip,  1  Ves.  Sr.  2.39. 

106  Cavander  v.  Bulteel,  9  Ch.  App.  79. 

10  7  In  ro  Langmead's  Trusts,  20  Bear.  20,  7  De  Gex,  M.  &  G.  353. 

108  Brickett  t.  Downs,  163  Mass.  70,  39  N.  E.  776;  Davies  v.  Atkinson,  124  111. 
474,  16  N.  E.  899;  Janney  v.  Springer.  78  Towa,  617,  43  N.  W.  461;  Farwell  ▼. 
Trust  Co.,  45  Minn.  495,  48  N.  W.  326.  In  re  Langmead's  Trusts,  20  Beav.  20, 
7  De  Gei,  M.  &  G.  353. 


§§  I  '  -79)  partner's  lien.  183 

character  of  members."'  It  has  therefore  been  held  that  where  a 
partner  borrowed  money  from  the  firm  for  some  private  purpose 
of  his  own,  and  then  became  bankrupt,  his  assignees  were  entitled 
to  his  share  in  the  partnership,  ascertained  without  taking  into  ac- 
count the  sum  due  from  him  to  the  firm  in  respect  of  this  loan,  and 
that  the  solvent  partners  were  driven  to  prove  against  his  estate 
in  order  to  obtain  paj-ment  of  the  money  lent.^" 
IjOSs  of  Lien. 

Further,  a  partner's  lien  on  partnership  property  is  lost  by  the 
conversion  of  such  property  into  the  separate  property  of  another 
partner.  Therefore,  if,  on  a  dissolution,  it  is  agreed  between  the 
partners  that  the  property  of  the  firm  shall  be  divided  in  specie 
among  them,  and  that  the  debts  shall  be  paid  in  some  specified 
manner,^ ^^  and  if  the  property  is  accordingly  divided,  but  the  debts 
remain  unpaid,  the  lien  which  each  partner  had  on  the  property 
before  its  division  is  gone;  and  consequently  no  partner  has  a  right 
to  have  the  specific  things  allotted  to  any  other  partner  brought 
back  into  the  common  stock,  and  applied  in  liquidation  of  the  part- 
nership liabilities.^ ^^  Upon  the  same  principle,  if  two  partners  con- 
sign goods  for  sale,  and  direct  the  consignee  to  carry  the  proceeds 
of  the  sale  equally  to  their  separate  accounts,  without  any  reserve, 
and  this  is  done,  neither  partner  has  any  lien  on  the  share  of  the 

109  Mack  T.  Woodruff.  87  111,  570;  Mumford  v.  Nicoll,  20  Johns.  (N.  Y.)  611; 
Warren  t.  Taylor,  60  Ala.  218.  Cf.  Fish  v.  Thompson,  G8  Vt.  273,  35  Atl.  174; 
Hayes  v.  Hayes,  66  N.  H.  134,  19  Atl.  571;  Scheuer  v.  Berringer,  102  AJa.  216, 
14  South.  640.  The  lien  does  not  cover  individual  debts  owed  by  one  partner  to 
another.  Mack  v.  Woodruff,  87  111.  570;  Mumford  v.  Nicoll,  20  Johns.  (N.  Y.) 
611;  Hill  V.  Beach,  12  N.  J.  Eq.  31;  Evans  v.  Bryan,  95  N,  C.  174;  Lewis  v.  Har- 
rison, 81  Ind.  278. 

110  Ryall  V.  Rowles,  1  Ves.  Sr.  348,  1  Atk.  1G5;  Meliorucchi  v.  Assurance  Co., 
1  Eq.  Cas.  Abr.  8.  And  see  Smith  v.  De  Silva,  Cowp.  409.  When  one  partner  re- 
tires, and  the  continuing  partner  assumes  the  debts,  the  retiring  partner's  lien 
may  be  preserved  by  contract.  Marsh  v.  Bennett,  5  McLean,  117,  Fed,  Cas.  No. 
9,110;  Topliff  V.  Vail,  1  Har.  (Mich.)  340;  Harmon  v.  Clark,  13  Gray  (Mass.)  114; 
Wildes  V.  Chapman,  4  Edw.  Ch.  (N.  Y.)  669-  Savage  t.  Carter,  9  Dana  (Ky.)  408. 

111  Giddings  v.  Palmer,  107  Mass.  269;  Hapgood  .  Cornwell,  48  111.  64;  Robert- 
son V.  Baker,  11  Fla.  192;  Hart  v.  Clark,  54  Ala.  490;  Andrews  v,  Mann,  31  Miss. 
322. 

112  Lingen  v.  Simpson,  1  Sim.  &  S.  600;  In  re  Langmead's  Trusts,  7  De  Gei, 
M,  dc  G.  353,  per  Lord  Justice  Turner. 


184  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

other  in  those  proceeds,  although  it  would  have  been  otherwise  if 
they  had  remained  part  of  the  common  property  of  the  two."* 

No  Lien  if  Partnership  is  Illegal. 

If  a  partnership  is  illegal,  its  members  have  no  lien  upon  their 
common  property,  or  upon  each  other's  shares  therein,"*  unless  it 
be  by  virtue  of  some  agreement  not  affected  by  the  illegality. 

Lien  of  Co-owners. 

Mere  co-owners  have  no  such  lien  as  is  enjoyed  by  co-partners.*** 
But  a  part  owner  of  a  ship  has  a  right  to  have  the  gross  freight  ap- 
plied, in  the  first  place,  in  payment  of  the  expenses  incurred  in 
earning  it."* 

DIVISION  OF  PROFITS. 

80.  The  times  at  -which  profits  are  to  be  divided,  and  the 

quantum  to  be  divided  at  any  one  time,  may  be 
determined  by  a  m.ajority  of  the  partners,  in  the 
absence  of  any  contract  on  the  subject. 

81.  On  final  accounting,  only  the  excess   of  receipts   over 

expenditures  is  divisible  as  profits;  but,  for  the  pur- 
pose of  a  preliminary  or  periodic  division,  the  ex- 
cess of  the  ordinary  current  receipts  over  the  ordi- 
nary current  expenditures  may  be  divided  as  profits, 
and  extraordinary  expenses  may  be  defrayed  tem- 
porarily out  of  the  capital. 

The  realization  and  division  of  profits  is  the  ultimate  object  ol 
every  partnership,  and  the  right  of  every  partner  to  a  share  of  the 
profits  made  by  the  firm  to  which  he  belongs  is  too  obvious  to 

"8  Holroyd  v.  GritBths,  3  Drew.  428.  In  Holderness  r.  Shackels,  8  Barn,  & 
C.  612,  the  transfer  to  each  partner  was  subject  to  the  lien,  which  was  not,  there- 
fore, lost. 

114  Ewing  V.  Osbaldiston,  2  Mylne  &  O.  88. 

iiB  In  re  Leslie,  23  Ch.  Div.  552;  Kay  v.  Johnston,  21  Bear.  536. 

118  Green  t.  Briggs,  6  Hare,  395;  Alexander  t.  Simms,  18  Beav.  80,  5  De  Gex 
M.  &  G.  57;  Lindsay  v.  Gibbs,  22  Beav.  522,  3  De  Gex  &  J.  690.  See,  aa  to  the 
lien  of  the  master  on  freight,  Bristoe  v.  Whitmore.  9  H.  L.  Caa.  391;  Smith  t. 
Plummer,  1  Barn.  &  Aid.  582. 


§§   80-81)  DIVISION    OF   PROFITS.  185 

require  comment.  Where  there  is  no  right  to  share  profits,  there 
can  be  no  partnership,  and  almost  all  the  other  rights  possessed 
by  partners  may  be  said  to  be  incidental  to  the  right  in  question.*" 
Tiines^  etc.^  of  Division. 

The  times  at  which  the  profits  are  to  be  divided;  the  quantum 
to  be  divided  at  any  one  time;  the  sums,  if  any,  which  are  to  be 
placed  to  the  debit  of  the  firm,  in  favor  of  any  particular  partner, 
for  salary,  interest  on  capital,  etc.,  before  any  profits  are  to  be 
divided, — these  and  all  similar  matters  are  usually  made  the  sub- 
ject of  express  agreement;  but  where  no  such  agreement  has  been 
made,  and  no  tacit  agreement  relative  to  them  can  be  inferred, 
the  principles  already  laid  down  in  this  chapter  must  be  ap- 
plied. ^^^  With  respect  to  the  times  of  division,  and  quantum  to 
be  divided  at  any  given  time,  it  is  conceived  that  the  majority  must 
govern  the  minority,  where  no  agreement  upon  the  subject  has  been 
come  to;  "»  for  these  are  matters  of  purely  internal  regulation,  and 
with  respect  to  such  matters  a  dissentient  minority  have  only  one 
alternative,  viz.  either  to  give  way  to  the  majority,  or,  if  in  a  posi- 
tion so  to  do,  to  dissolve  the  partnership."" 

Whxit  is  Divisible  as  Profits. 

Profits  are  the  excess  of  receipts  over  expenses;  "*  and,  in  wind 
ing  up  a  partnership,  nothing  is  properly  divisible  as  profits  which 

117  gee  ante,  p.  34  et  seq. 

118  As  to  the  mode  of  ascertaining  profits  where  a  person  not  a  partner  is  en- 
titled to  a  share  of  them,  see  Rishton  v.  Grissell,  L.  R.  5  Eq.  320,  L.  R.  10  Eq. 
393;  Geddea  t.  Wallace,  2  Bligh.  270. 

110  Keuriedy  v.  Kennedy,  3  l^ana  (Ky.)  230.  Stevens  v.  Railroad  Co.,  9  Hare, 
326;  Cony  v.  Railway  Co.,  29  Beav.  263  (as  to  declaring  dividends  before  paying 
debts);  Browne  v.  Canal  Co.,  13  Beav.  32  (as  to  paying  dividends  before  works 
are  finished).  See,  also.  Wood  v.  Beath,  23  Wis.  254;  Carithers  v.  Jarrell,  20  Ga. 
842. 

120  See  nnte,  p.  15S. 

121  Welsli  V.  Canfield,  60  Md.  469;  Fuller  t.  Miller,  105  Mass.  103;  Grant  v. 
Bryant,  101  Mass.  567;  Gill  v.  Geyer,  15  Ohio  St,  399.  Aa  to  the  payment  of 
income  tax.  see  Last  v.  Assurance  Corp.,  10  App.  Cas.  438;  Lawless  v.  Sullivan, 
6  App.  Cas.  373.  And,  where  business  is  carried  on  abroad,  see  Golquhoun  v. 
Brooks,  19  Q.  B.  Div.  400:  Erichsen  v.  Last,  8  Q.  B.  Div.  414;  Cesena  Sulphur 
Co.  V.  Nicholson,  1  Exch.  Div.  428;  Sulley  v.  Attorney  General,  5  Hurl.  &  N.  711. 
In  order  to  compute  profits,  it  is  error  to  estimate  the  amount  of  assets  by  add- 


186  IMPLIED    RIGHTS    AND    LIABILITIES    INTER    SE.  (Ch.   4 

does  not  answer  this  description.  But  for  the  purposes  of  business, 
and  of  facilitating  annual  divisions  of  profits,  a  distinction  is  made 
between  ordinary  and  extraordinary  receipts  and  expenses;  and 
while  all  extraordinary  expenses  are  frequently  defrayed  out  of 
capital,  and  out  of  money  raised  by  borrowing,  the  ordinary  ex- 
penses are  defrayed  out  of  the  business,  and  the  profits  divisible  in 
any  year  are  ascertained  by  comparing  the  ordinary  receipts  with 
the  ordinary  expenses  of  that  year.  It  is  obvious  that,  unless  some 
such  principle  as  this  were  had  recourse  to,  there  could  be  no  divi- 
sion of  profits,  even  of  the  most  flourishing  business,  while  any  of 
its  debts  were  unpaid  and  any  of  its  capital  sunk.^"  What  losses 
and  expenses  ought  to  be  treated  as  ordinary,  and  therefore  pay- 
able out  of  current  receipts,  and  what  ought  to  be  treated  as  ex- 
traordinary, and  payable  legitimately  out  of  capital  or  money  bor- 
rowed, is  a  question  on  which  opinions  may  often  honestly  differ; 
and  one  which,  when  open  to  honest  diversity  of  opinion,  a  ma- 
jority of  membirs  can  lawfully  determine.^"  But,  if  the  current 
receipts  exceed  the  current  expenses,  it  is  apprehended  that  the 
difference  can  be  divided  as  profit,  although  the  capital  may  be 
spent,  and  not  be  represented  by  salable  assets.*'* 

ing  to  the  cost  price  of  goods  on  hand  a  certain  per  cent.,  as  representing  the  selling 
price,  though  it  appears  that  the  partners  had  theretofore,  at  successive  periods, 
taken  stock  in  that  manner.  Gimpel  v.  Wilson,  10  Misc.  Rep.  153,  30  N.  Y.  Supp. 
942.  On  an  accounting  as  to  a  partnership  conducted  for  the  purchase  and  sale 
of  horses,  the  value  of  horses  that  died  during  the  continuance  of  the  business 
should  be  deducted  from  the  profits.  Smith  v.  Smith,  18  R.  I.  722,  30  Atl.  602. 
A  firm  agreed  to  furnish  plaintiff  money  with  which  to  buy  hogs  for  its  packing 
house,  and  that  he  should  receive  for  his  services  one-half  of  a  certain  member's 
share  of  the  profits  of  the  firm.  Nothing  was  said  ah  to  how  the  money  should  be 
obtained,  and  no  representation  was  made  as  to  the  firm's  capital.  It  had  no 
money  of  its  own,  and  all  the  money  it  furnished  to  plaintiff  was  borrowed.  Held 
that,  in  determining  plaintiff's  compensation,  the  interest  paid  for  such  money 
must  be  considered  as  an  expense  of  conducting  the  business,  and  not  as  a  profit 
in  which  plaintiff  was  to  share.    Helmer  v.  Yetzer  (Iowa)  61  N.  W.  206. 

122  1  Lindl.  Partn.  394. 

123  Gregory  v.  Patchett,  33   Beav.  595. 

124  Meserve  v.  Andrews,  106  INIass.  419;  Whitcomb  v.  Converse,  119  Mass.  38; 
Braun's  Appeal,  105  Pa.  St.  414;  Fletcher  v.  Hawkins,  2  R.  I.  330;  Parnell  v. 
Robinson,  58  Ga.  26.  As  to  the  construction  of  clauses  relating  to  payment  of 
dividends  out  of  profits,  see  Davison  v.  Gillies,  16  Ch.  Div.  347,  note;  Dent  v.  Tram- 


§§    80-Sl)  DIVISION    OF    PROFITS.  187 

Cases  Where  Dwidends  have  hem  Held  not  Improper, 

Under  ordinary  chcumstances,  and  in  the  absence  of  any  agree- 
ment to  the  contrary,  moneys  earned  ought  to  be  treated  as  profits 
of  the  year  in  which  they  are  received,  and  not  as  profits  of  the 
year  in  which  they  are  earned.^** 

Exclusion  f/^om  Share  of  Profits. 

As  will  be  seen  hereafter,  in  the  absence  of  an  express  agreement 
to  that  effect,  partners  have  no  right  to  expel  one  of  their  number, 
nor  to  forfeit  his  share.^^e  Xeither  can  they  exclude  him  from  the 
enjoyment  of  his  share  of  profits.^*^  A  partner  so  excluded  can  com- 
pel his  co-pa rtuers  to  restore  him  to  his  rights,  and  account  to  him 
accordingly.^  2* 

way'B  Co.,  Id.  344.  As  to  paying  dividends  out  of  capital,  see  Bloxam  t.  Rail- 
way Co.,  3  Ch.  App.  337;  Flitcroft's  Case,  21  Ch.  Div.  519. 

126  MacLaren  v.  Stainton,  3  De  Gex,  F.  &  J.  214.  per  Turner.  L.  J.  Cf. 
Browne  v.  Collins,  L.   R.  12  Eq.  oSG. 

126  Ambler  v.  Whipple,  20  Wall.  546;  Patterson  ▼.  Silliman,  28  Pa.  St  304; 
Gorman  t.  Russell,  14  Cal.  531. 

12T  Griffith  V.  Paget,  5  Ch.  Div.  894;  Adlej  v.  WhitsUble  Co,  17  Vea.  315, 
19  Ves.  304,  and  1  Mer.  107. 

i2«  1  Lindl.  Partn.  3'J5. 


188  ARTICLES    OF    PARXMiliaHlP.  (Ch.  6 

CHAPTER  V. 

ARTICLES  OF  PARTNERSHIP. 

82.    In  General— Purpose  and  Effect. 
8^-87.    Rules  of  Construction. 
88.    Usual  Clauses  in  Articles. 

(a)  The  General  Nature  of  the  Business. 

(b)  The  Time  When  the  Business  shall  Commeno«t 

(c)  The  Duration  of  the  Relation. 

(d)  The  Name  or  Style  of  the  Firm. 

(e)  The  Capital,  Advances,  etc. 

(f)  Rights  of  the  Partners  in  Firm  Property. 

(g)  Profits  to  be  Distributed. 

(h)  Duties  Resting  upon  Partners. 

(i)  Keeping  of  Proper  Books  of  Account. 

(j)  Restraint  upon   Partners  as  to  Their  Exerclslnic  Similar  Buslnes* 

on  Individual  Account, 

(k)  Decision  of  Dififerences  among  Partners  by  a  Majority. 

(1)  Annual  Account, 

(m)  Gonoral  Account  upon  Dissolution, 

(n)  Representatives  of  Deceased  Partner  Succeeding  to  His  Sbar*  In 

Firm  Business. 

(o)  Retirement  of  a  Partner,  and  Assignment  of  Hi*  Sbar«w 

(p)  Clause  of  Expulsion, 

(q)  Arbitration. 

(r)  Liquidated  Damagea. 

IN  GENERAL— PURPOSE  AND  EFFECT. 

82.  Partners  may,  by  express  contract,  regulate  their 
rights,  powers,  and  duties  inter  se.  When  they  do 
so  by  formal,  written  instrument,  such  instrument 
is  called  the  "articles  of  partnership." 

It  has  been  seen  that  a  partnership  may  be  established  without 
a  formal  agreement  to  that  effect,^  and  the  rights  and  liabilities  of 
the  partners  inter  se,  which  will  be  implied  by  law  from  the  mere 
fact  of  partnership,  formed  the  subject  of  the  preceding  chapter.' 

I  Ante,  p.  20.  *  See  ante,  p.  157. 


§§   83-87)  RULES    OF   CONSTRUCTION.  189 

Where  a  partnership  is  deliberately  formed,  however,  it  is  nsual 
to  provide  by  express  agreement  what  the  rights,  powers,  and  du- 
ties of  each  partner  shall  be.  This  the  partners  are,  of  course,  com- 
petent to  do,'  and  their  agreement  overrides  the  presumption  of 
law  on  the  same  subject.  This  formal  agreement  constitutes  what 
is  called  the  "articles  of  partnership." 

RULES  OF  CONSTRUCTION. 

83.  Partnership  articles  are  not  intended  to  define  all  the 

rights  and  duties  of  partners  (p.  190). 

84.  Articles  must  be  construed  with   reference    to  the  ob- 

jects of  the  partners  (p.  191). 

85.  Articles  must  be  construed,  if  possible,  so  as  to  defeat 

fraud  and  the  taking  of  unfair  advantage  (p.  192). 

86.  Provisions  in  the  articles  may  be  waived  or  varied  by 

tacit  agreement  evidenced  by  conduct  (p.  193). 

87.  Original  articles  will  apply  to  a  partnership  continued 

under  them  (p.  195). 

In  General. 

The  articles  of  partnership  constitute  the  regulations  that  are 
to  govern  the  partners,  within  the  relation,  as  to  each  other.  But 
it  is  not  to  be  inferred  from  this  that  the  letter  of  the  articles  must 
govern  the  partners  in  all  cases;  for  the  binding  effect  depends  some- 
what upon  the  conduct  of  the  parties,  which  conduct,  if  sedulously 
maintained  in  deliance  of  the  provisions  of  the  articles,  creates  a 
rule  contrary  to  the  articles,  in  governing  the  relations  of  the  par- 
ties.* Thus,  Collyer  tells  US'*  that:  "It  will  be  necessary  to  bear 
in  mind  three  important  observations  made  at  different  times  by 
Lord  Eldon.  They  are  these:  (1)  Partnerships  are  regulated  either 
by  express  contract,  or  by  the  contract  implied  by  law  from  the 

«  Hall  T.  Sannoner,  44  Ark.  34. 

*  McCaU  V.  Moss,  112  111.  493;  Gammon  v.  Huse,  100  111.  234;  Dow  t.  Moore, 
47  N.  H,  419;  Henry  v.  Jackson,  37  Vt.  431;  England  v.  Curling,  8  Bear.  129; 
PUling  V.  Pilling,  3  De  Gei,  J.  &  S.  162.    But  aee  Thomas  t.  Lines,  83  N.  O.  191. 

•  Partn.  (6th  Ed.)  i  154. 


190  ARTICLES    OF    PARTNERSHIP.  (Ch.   5 

relation  of  the  parties.  The  duties  and  obligations  arising  from 
that  relation  are  regulated,  as  far  as  they  are  touched,  by  the 
express  contract.  U  it  does  not  reach  all  those  duties  and  obli- 
gations, they  are  implied  and  enforced  by  the  law."  (2)  Partner- 
ship articles  are  read  in  a  court  of  equity  as  not  containing  the 
clauses  on  which  the  parties  have  not  acted.^  (3)  The  transactions 
of  partners  are  always  to  be  looked  at,  in  order  that  you  may  de- 
termine between  them,  even  against  the  written  articles,  what 
clauses  in  those  articles  will  not  bind  them,  provided  those  trans- 
actions afford  a  higher  probability,  amounting  almost  to  demon- 
stration." • 

Articles  not  Intended  to  Define  All  Rights^  Pmcers^  ayid  Duties. 

In  other  words,  the  rights  and  corresponding  duties  of  partners 
mutually  are  never  supposed  to  be  all  explicitly  set  forth  in  the 
articles.®  Thus,  it  was  said  by  Lord  Langdale  in  the  case  of  Smith 
V.  Jeyes:  '°  "The  transactions  of  persons  with  each  other  cannot 
be  considered  merely  with  reference  to  the  express  contract  between 
them.  The  duties  and  obligations  arising  from  the  relation  be- 
tween the  pailies  are  regulated  by  the  express  contract  between 
them,  so  far  as  the  express  contract  extends  and  continues  in  force; 
but  if  the  express  contract,  or  so  much  of  it  as  coutiuues  in  force, 
does  not  reach  to  all  those  duties  aud  obligations,  they  are  implied 
and  enforced  by  the  law;  and  it  is  often  a  matter  to  be  collected 
and  inferred  from  the  conduct  and  practice  of  the  parties,  whether 
they  have  held  themselves,  or  ought  not  to  be  held,  bound  by  the 
particular  provisions  contained  in  their  express  agreement.  When 
it  is  insisted  that  the  conduct  of  one  partner  entitled  the  other 
to  a  dissolution,  we  must  consider,  not  merely  the  specific  terms 
of  the  express  contract,  but  also  the  duties  and  obligations  which 
are  implied  in  every  partnership  contract" 

8  Crawshay  t.  Collins,  15  Ves.  226;  Geddes  v.  Wallace,  2  Bligh,  297;  Jackson  v. 
Sedgwick,  1  Swanst.  460;  Coust  v.  Harris,  Turn.  &;  K.  523. 

T  Boyd  V.  Mj-uatt,  4  Ala.  79;  Jacks^ou  v.  Sedgwick,  1  Swanst,  460;  Simmon* 
V.  Leonard,  8  Hare,  581.    But  see  Smith  v.  Chandos,  2  Atk.  159. 

8  Geddes  v.  Wallace,  2  Bligh,  297;  Ex  parte  Barber,  5  Ch.  App.  687. 

9  Nelson  v.  Bealby,  30  Beav.  472;  Smith  v.  Jeyes,  4  Beav.  506;  Browniof  t. 
Browning,  31  Bear.  316;  Blisset  v.  Daniel,  10  Hare,  522. 

1*  4  Bear.  505. 


§§   S3-87)  RULES    OF    CONSTRUCTION.  191 

Consti^ci'ion  vntli  Reference  to  Object  of  Partnership. 

The  objects  of  establishing  the  relation  are  to  be  considered, 
always,  in  the  interpretation  of  the  articles.  In  construing  the  ar- 
ticles, the  first  care  should  be  taken  to  understand  the  objects  for 
which  the  partnership  was  formed.  For  all  the  provisions  are  to 
be  construed  so  as  to  advance  these  objects,  rather  than  defeat 
them.^^  And,  although  the  articles  may  not  be  so  proposed  as  to 
make  the  provisions  clear  in  all  respects,  the  objects  of  the  part- 
nership will  always  be  looked  to  as  indicative  of  the  intention  of 
the  parlies  in  respect  of  these  several  provisions. 

"When  the  purpose  of  the  parties  is  distinctly  recited  or  men- 
tioned in  the  instrument,  the  words  which  seem  of  general  extent 
are  confined  to  the  declared  intentions  of  the  parties."  "  In  Gains- 
borough V.  Stork  ^'  the  articles  provided  that  "if  either  of  the  par- 
ties should  die  during  the  14  years  intended  for  the  partnership,  and 
after  an  account  passed  between  them,  then  the  surviving  partner 
should  take  to  his  own  use  all  the  goods,  ready  money,  and  things 
which,  on  the  last  casting  up  before  such  death,  should  happen  to 
be  in  stock  between  them,  and  should  pay,  or  satisfy,  to  the  exec- 
utor or  administrator  of  the  deceased  partner,  so  much  money  as 
the  share  of  such  deceased  partner  amounted  to  at  the  time  of  such 
last  account  made."  Subsequently  to  the  making  of  the  articles, 
the  parties,  by  way  of  amending  them,  indorsed  on  them,  in  quota- 
tion from  the  articles,  the  provision  set  forth  above,  and  added,  in 
effect,  that  if,  at  the  time  of  any  such  death,  debts  should  be  out- 
standing from  New  England  or  other  foreign  parts,  which  by  rea- 
son of  variation  of  exchange,  or  of  such  debts  proving  bad,  it  might 
damage  the  survivor  to  accept  on  the  basis  of  the  last  account,  it 
was  agreed  that  upon  the  death  of  either  party  during  the  term  the 
survivor  should  not  be  required  to  pay  to  the  executor  ior  any 
such  foreign  debts  as  at  the  time  of  the  death  were  due  to  the 
joint  trade,  otherwise  than  as   the  survivor  should  get  them   in, 

11  Chappie  V.  Cadell,  Jac  537;  Const  v.  Harris,  1  Turn.  &  R,  625;  Fennings  ▼. 
Grenville,  1  Taunt.  241;  Daries  v.  Hawkins,  3  Maule  &  S.  488;  Glassington  ▼. 
Thwaites,  1  Sim.  &  S.  131. 

»a  C0IJ7.  Parta.  (6tii  Ed.)  8  153.  is  Barnard,  312. 


192  ARTICLES    OF    PARTNERSHIP.  (Ch.  5 

jind  then  only  for  the  deceased's  share.  But,  upon  the  point  being 
raised,  Lord  Hardwicke  held,  two  accounts  having  been  passed  be 
fore  a  death  occurred,  that  the  indorsement  extended  only  to  such 
forpipTi  debts  as  should  be  included  in  the  last  account  stated  be- 
fore the  death  of  a  partner,  and  not  to  such  debts  accruing  between 
the  time  of  the  account  and  the  death,  since  the  indorsement  recited 
that  part  of  the  articles  by  virtue  of  which  only  such  foreign  debts 
were  included  as  existed  before  the  last  staled  account  prior  to  the 
death  of  a  partner. 

Construction  so  as  to  Defeat  Fraud,  etc. 

The  articles  will  always  be  construed  so  as  to  frustrate  any  ef- 
forts of  one  partner  to  defraud  or  impose  upon  another.**  To  use 
Lindley's  illustrations  ^*  of  siicli  injury  to  a  partner,  through  another 
partner's  fraud  or  imposition,  that  might  occur  but  for  this  rule 
of  interi)retation :  "Thus,  it  is  very  common  for  partners  to  agree 
that  half-yearly  accounts  shall  be  made  out  and  signed,  and  not 
be  afterwards  disputed;  but,  notwithstanding  sucb  a  clause,  if  one 
partner  knowingly  makes  out  a  false  account,  and  his  co-partners 
sign  it  upon  the  faith  that  it  is  correct,  they  will  not  be  bound  by 
it.*'  Again,  it  is  by  no  means  unusual  for  partners  to  agree  that 
yearly  accounts  shall  be  taken,  and  that,  in  the  case  of  the  death 
of  a  partner,  his  representatives  shall  be  paid  his  share  as  appear- 
ing in  the  last  account,  with  interest  instead  of  subsequent  profits; 
but  if  the  partners  do  not,  for  several  years,  make  out  any  ac- 
counts, and  then  one  of  them  dies,  the  survivors  are  not  entitled 
to  act  on  the  letter  of  the  agreement,  and  pay  only  the  amount  which 
in  the  last  account  was  carried  to  the  credit  of  the  deceased,  with 
interest  on  such  an  amount."  *^ 

This  rule  governs  also  the  defining  of  any  powers,  however  ex- 
plicitly given,  with  which  one  partner  may  be  clothed  by  the  arti- 
cles. Such  powers  are  necessarily  given  for  the  benefit  of  the  firm 
as  a  whole,  and  not  for  the  individual   benefit  of  the  person  so 

14  Oldaker  t.  Lavender,  6  Sim.  239;  Blisset  v.  Daniel,  10  Hare,  493;  Wood  v. 
Woad.  L.  K.  9  Exch.  lUO;    Pettyt  t.  Janeson,  6  Madd.  14G. 
IB  2  Parta-  408.  **  Oldaker  v.  Lavender,  6  Sim.  239. 

»»  Pettyt  T.  Janeson,  6  Madd.  146. 


§§   83-87)  RULES    OF    CONSTRUCTION.  193 

clothed;  and  therefore  the  latter's  exercise  of  the  powers,  to  the 
detriment  of  his  co-partners,  for  his  private  ends,  will  not  be  tol- 
erated.^' 

Provisions  Waived  or  Varied  hy  Tacit  Agreement. 

Any  article,  however  express,  is  capable  of  being  abandoned  by 
the  consent  of  all  the  partners;  and  this  consent  may  be  evidenced, 
not  only  by  express  words,  but  by  conduct.^' 

"In  ordinary  partnerships,  nothing  is  more  clear  than  this:  That 
although  partners  enter  into  a  written  agreement,  stating  the  terms 
upon  which  the  joint  concern  is  to  be  carried  on,  yet  if  there  be  a 
lonjr  course  of  dealing,  or  a  coui-se  of  dealing  not  long,  but  still 
so  long  as  to  demonstrate  that  they  have  all  agreed  to  change  the 
terms  of  the  original  written  agreement,  they  may  be  held  to  have 
changed  those  terms  by  conduct.  For  instance,  if,  in  a  common 
partnership,  the  parties  agree  that  no  one  of  them  shall  draw  or 
accept  bills  of  exchange  in  his  own  name  without  the  concurrence  of 
all  the  others,  yet,  if  they  afterwards  slide  into  a  habit  of  permit- 
ting one  of  them  to  draw  or  accept  bills  without  the  concurrence 
of  the  others,  this  court  will  hold  that  they  have  varied  the  terms 
of  the  original  agreement  in  that  respect."  *° 

This  principle  was  acted  on  by  Lord  Eldon  in  a  case  where  the 
partners  had  agreed  that  annual  accounts  should  be  taken,  and 
that,  in  case  of  the  death  of  a  partner,  his  representatives  should 
be  paid  an  allowance,  instead  of  profits;  for  it  appeared  that  for 
some  years  no  accounts  had  been  taken,  and  that  the  partners  had 
engaged  in  transactions  of  such  a  nature  that  it  would  have  been 

18  So  a  power  to  expel  must  be  construed  for  the  benefit  of  the  firm.  Pol.  Partn. 
art.  40. 

19  Gage  V.  Parmelee,  87  111.  329;  Gammon  y.  Huse,  100  111.  234;  Dow  v.  Moore, 
47  N.  H.  419;  Tlirall  v.  Seward.  37  Vt  573;  Hall  v.  Sannoner,  44  Ark.  34.  Where 
it  is  uncertain,  from  the  terms  of  a  co-partnership  agreement,  whether  personal 
taxes  of  one  of  the  partners  should  be  charged  to  the  firm's  expense  account,  the 
actual  construction  adopted  by  the  partners  through  a  number  of  years  will  be 
considered  as  giving  a  proper  construction  to  the  agreement.  Snyder  v.  Seaman, 
1  App.  Div.  258,  37  N.  Y.  Supp.  696. 

20  Lord  Eldon  in  Const  v.  Harris,  Turn.  &  R.  523.  And  see  Coventrj  t.  Bar- 
clay, 33  Beav.  1,  on  appeal  3  De  Gex,  J.  &  S.  320;  Pilling  v.  Pilling,  8  De  Gei, 
J.  &  S.  162;    England  v.  Curling,  8  Beav.  133;    Some*  t.  Currie,  1  Kay  &  J.  605. 

GEOJ'ART.— 13 


194  ARTICLES    OF    PARTNERSHIP.  (Ch.   5 

unfair  to  have  applied  the  original  agreement.'*  So,  a  practice  of 
treating  losses  as  bad,  when  discovered  so  to  be,  was  hold  to  ap- 
ply, as  between  the  executors  of  a  deceased  partner  and  the  sur- 
viving partners,  although  the  effect  was  to  give  the  executors  much 
more  than  they  would  otherwise  have  been  entitled  to.^*  So,  where 
articles  contained  a  stirtulation  that  the  partners  should  contribute 
to  losses  and  share  profits  in  a  certain  proportion,  and  it  appeared 
that  a  person  who  managed  the  affairs  of  the  firm  had  always  re- 
ceived a  share  of  the  profits,  but  had  never  been  called  upon  to 
contribute  to  losses,  it  was  held  that,  assuming  him  to  be  a  partner 
in  the  proper  sense  of  the  term,  and  to  have  been  originally  bound 
by  the  aj-ticles  to  contribute  to  losses,  the  articles,  so  far  as  they 
obliged  him  so  to  contribute,  had  been  varied  by  the  conduct  of 
the  parties,  and  were  no  longer  binding  on  him." 

Sarae — Acts  of  t lie  Majority  in  Re-^j^i  of  Changes. 

There  are  some  variations  from  the  letter  of  the  articles  which 
a  majority  of  the  partnei-s  may  effect,  such  bi'ing  exceptions,  for  in 
most  cases  the  changes  must  be  acquiesced  in  by  all;  but,  even  in 
such  exceptional  cases,  all  the  partners  have  the  right  to  be  heard 
pro  and  con.  and,  if  any  of  them  have  not  been  given  an  oppor- 
tunity to  be  so  heard,  the  changes  cannot  bind  the  partners  thus 
denied.'* 

Same — JVew  Partners — ITmo  Affected  by  Changes. 

A  partner,  having  become  such  subsequently  to  the  formation  of 
the  partnership,  and  having  entered  the  firm  through  another  part- 
ner, who  has  committed  himself  to  some  variation  from  the  ex- 
press terms  of  the  articles,  cannot  insist  ui)on  the  letter  of  the 
instrument  governing  those  matters  in  respect  of  which  the  other 
has  so  committed  himself."* 

21  Jackson  v.  Sedgwick,  1  Swanst.  4U0.  And  see  Pettyt  t.  Jaueson,  t5  Madd.  146; 
Simmons  v.  Leonard,  3  Hare,  581. 

22  Ex  parte  Barber,  5  Ch.  App.  687. 
28  Geddea  v.  Wallace,  2  Bligh,  270. 

2«  Const  v.  Harris,  Turn.  &  R.  496,  524.  See  Livingston  t.  Lynch,  4  Johns. 
Ch,  573;  Manegold  v.  Grange,  70  Wis.  575,  36  N.  W.  263;  Abbot  v.  Johnson, 
32  N.  H.  9;    England  t.  Curling,  8  Beav.  129;    Const  t.  Harris,  Turn.  &  R.  496. 

2  5  Wilson  V.  Liueberger,  83  N.  C.  524.  528;  Saugston  v.  Hack,  52  Md.  173; 
Const  T.  Harris,  Turn.  &  R.  496,  521.      See  Boardman  v.  Close,  44  Iowa,  428. 


§§  83-87)  RULES    OF    CONSTRUCTION.  195 

Original  Articles  Apply  to  Partnership  Continued  under  Them. 

If  a  partnership  orio:inally  entered  into  for  a  definite  time  is 
continued  after  the  exi)iration  of  that  time,  without  any  new  agree- 
ment, the  articles  under  which  the  partnership  was  first  carried  on 
continue,  so  far  as  they  are  applicable  to  a  partnership  at  will, 
to  regulate  the  rights  and  obligations  of  the  partners  inter  se,^* 
Thus,  in  King  v.  Chuck  ^^  three  partners,  A.,  B.,  C,  agreed  that, 
if  either  of  them  should  die,  his  capital,  as  appearing  by  the  last 
account,  should  be  paid  to  his  representatives  by  the  surviving  part- 
ners, on  whom  the  trade  was  then  to  devolve.  A.  died,  and  this 
agreement  was  acted  on,  and  B.  and  C.  continued  in  partnership 
without  coming  to  any  fresh  agreement.  Then  B.  died,  and  it  was 
held  that  B.  and  C.  had  in  fact  continued  in  partnership  on  the 
old  terms,  and  that  B.'s  executors  were  therefore  to  be  paid  the 
amount  appearing  to  be  his  capital  in  the  last  account  come  to  be- 
tween him  and  C. 

Same — Provisions  Applicable  during  the  Term  of  Partnership. 

Even  where  a  partnership  is  entered  into  for  a  term  of  years,  and 
the  articles  provide  for  events  happening  during  the  term,  or  dur- 
ing the  partnership,  the  above  rule  has  been  still  applied.  Thus, 
where  two  persons  agreed  to  become  partners  for  14  years,  and 
stipulated  that,  if  either  died  during  this  co-partnership  term,  his 
share  should  be  taken  by  the  other  at  a  certain  sum,  and  the  14 
years  expired,  and  the  two  persons  continued  in  partnership  to- 
gether without  coming  to  any  fresh  agreement,  and  then  one  of 
them  died,  it  was  held  that  the  above  stipulation  was  binding,  and 
that  the  share  of  the  deceased  belonged  to  the  survivor,  upon  pay- 
ment of  the  sum  mentioned. ^^  The  expression  "the  partnership 
term"  was  held  equivalent  to  the  time  during  which  the  partners  con- 
tinue in  partnership  without  coming  to  any  fresh  agreement. 

But  the  authorities  on  this  head  are  not  uniform.     In  their  pres- 

2«  U.  S.  Bank  v.  Biuney,  5  Mason,  176,  Fed.  Cas.  No.  10,791;  Robertson  v. 
Miller,  1  Brock.  46G,  Fed.  Cas.  No.  11,926;  Mifflin  v.  Smith,  17  Serg.  &  R. 
165;  Gould  v.  Horner,  12  Barb.  (N.  Y.)  601;  Blasdell  v  Souther,  6  Gray  (Mass.) 
149;  Frederick  v.  Cooper,  3  Iowa,  171;  Sangston  v.  Hack,  52  Md.  173;  Stephens 
T.  Orman,  10  Fla.  9;    Bradley  v.  Chamberlin,  16  Vt.  613. 

"  17  Beav.  325. 

2  8  Essex  V.  Essex,  20  Beav.  442.    And  see  Cox  v.  Willoughby,  13  Ch.  Div.  863. 


196  ARTICLES    OF    PARTNERSHIP.  (Ch.   5 

ent  state,  it  is  doubtful  whether  a  clause  giving  a  right  of  pre-emp- 
tion is  one  of  those  which  is  operative  after  the  termination  of  the 
partnership  originally  contemplated,  unless  the  articles  are  clear 
upon  the  subject.  A  right  of  expulsion  has  been  held  not  to  apply 
to  a  partnership  continued  after  the  expiration  of  the  time  for 
which  it  was  originally  entered  into."  But  an  arbitration  clause 
has  been  held  to  apply.'" 

USUAL  CLAUSES  IN  ARTICLES. 

88.  Articles  of  partnership  usually  contain  express  stipu- 
lations as  to  some  or  all  of  the  following:  subjects: 

(a)  The  general  nature  of  the  business  (p.  197). 

(b)  The  time  when  the  business  shall  commence  (p.  198). 

(c)  The  duration  of  the  relation  (p.  199). 

(d)  The  name  or  style  of  the  firm  (p.  199). 

(e)  The  capital,  advances,  etc.  (p.  200). 

(f )  Rights  of  the  partners  in  firm  property  (p.  203). 

(g)  Profits  to  be  distributed  (p.  203). 

(h)  Duties  resting  upon  partners  (p.  203). 

(1)  Keeping  of  proper  books  of  account  (p.  204). 

(j)  Restraint  upon  partners  as  to  their  transacting  simi- 
lar business  on  individual  account  (p.  205). 

(k)  Decision  of  differences  among  partners  by  a  majority 
(p.  205). 

(1)  Annual  accounts  (p.  205). 

(m)  General  account  upon  dissolution  (p.  206). 

(n)  Representatives  of  deceased  partner  succeeding  to 
his  share  in  firm  business  (p.  20(j). 

(o)  Retirement  of  a  partner,  and  assignment  of  his 
share  (p.  201). 

(p)  Clause  of  expulsion  (p.  208). 

(q)  Arbitration  (p.  209). 

(r)  Liquidated  damages  (p.  210). 

a»  Clark  v.  Loach.  32  Beav.  14.     See  Neilson  v.  Iron  Co.,  11  App.  Cas.  298. 
•0  Gillett  V.   Thornton,   L.   R.  19  Eq.  599.     For  other  provirfons   which  have 
been  held   not  to  continue,   see  Wilson   v.  Simpson,   89   N.   Y.   619;    Duffield   v. 


§   88)  USUAL    CLAUSES    IN    ARTICLES.  197 

Having  now  alluded  to  the  more  important  general  rules  which 
require  to  be  borne  in  mind  in  considering  the  effect  of  special  agree- 
ments between  partners,  it  is  proposed  to  notice  shortly  the  provi- 
sions usually  met  with  in  partnership  articles,  and  the  interpreta- 
tion which  has  been  put  upon  them  by  the  courts. 

In  framing  articles  of  partnership,  it  should  always  be  remem- 
bered that  they  are  intended  for  the  guidance  of  persons  who  are 
not  lawyers,  and  that  it  is  therefore  unwise  to  insert  only  such  pro- 
visions as  are  necessary  to  exclude  the  application  of  rules  which 
apply  where  nothing  to  the  contrary  is  said.  The  articles  should  be 
80  drawn  as  to  be  a  code  of  directions,  to  which  the  partners  may 
refer  as  a  guide  in  all  their  transactions,  and  upon  which  they  may 
settle  among  themselves  differences  which  may  arise,  without  hav- 
ing recourse  to  courts  of  justice. 

General  Nature  of  Busine^a. 

The  nature  of  the  business  should  always  be  stated.  Upon  it  de- 
pends the  extent  to  which  each  partner  is  to  be  regarded  as  the 
implied  agent  of  the  firm  in  his  dealings  with  strangers;  and  upon 
it  also,  in  a  great  measure,  depends  the  power  of  a  majority  of  part- 
ners to  act  in  opposition  to  the  wishes  of  the  minority.  The  nature 
of  the  business  into  which  the  parties  have  embarked  cajanot  be 
changed  after  they  have  agreed  upon  it  in  their  articles,  except  by 
the  unanimous  consent  of  the  partners.*^  In  the  case  cited.  Lord 
Eldon  decided  that  a  joint-stock  company  established  to  carry  on 
a  fire  and  life  insurance  business  could  not,  except  by  the  unanimous 
consent  of  its  members,  afterwards  include  marine  insurance  in  its 
business. 

Brainerd,  45  Conn.  424;    Clark  t.  Leach,  32  Bcet.  14;    Featherstonhaugh  v.  Pen- 
wick,  17  Ves.  298. 

81  Natusch  V.  Irving,  Gow,  Partn.  Append.  407;  Colly.  Partn.  (Wood's  Ed.)  § 
155.  A  partnership  agreement,  and  renewals  thereof,  recited  that  the  parties  had 
associated  themselves  in  the  "regular  real-estate  •  •  •  business,"  and  provided 
for  a  division  of  the  net  profits  arising  from  "said  brokerage  business."  Held,  the 
term  "regular  real-estate  business"  meant  the  business  of  real-estate  brokers,  and 
did  not  include  speculation  in  real  estate.  Davi«  t.  Darling,  80  Hun,  299,  30 
N.  Y.  Supp.  321. 


19S  ARTICLES    OF    PARTNERSHIP.  (Ch.  5 

Tfce  Place  of  Busi/ness. 

The  place  of  business  should  also  be  stated  in  the  articles,  and  if 
the  place  is  held  on  lease,  or  is  otherwise  held  upon  a  tenure  that 
may  expire  before  the  term  provided  for  the  expiration  of  the  firm 
relation,  provision  should  be  made  for  the  renewal  of  the  lease,  or 
for  the  acquisition  of  another  place  of  business;  otherwise  the 
business  may  come  to  a  premature  end.  as  was  the  case  in  Clements 
V.  Norris,'^  where  the  business  was  to  be  carried  on  at  a  particular 
place,  or  at  such  other  place  as  the  partners  might  agree  upon,  and 
they  disagreed. 

Tiyne,  of  Commencement  of  Partnership. 

The  time  at  which  the  business  is  to  commence  should  be  set  out 
in  the  articles.  In  default  of  being  so  set  out,  however,  the  busi- 
ness constructively  begins  at  the  date  of  the  articles."  If  the  ar- 
ticles set  forth  a  time  other  than  such  date,  either  prior  or  sub- 
sequent to  the  latter,  the  p^o^^sion  binds  the  partners,  so  that  the 
profits  and  losses  are  to  be  accounted  between  them  only  as  from 
the  date  mentioned,  but  it  does  not  affect  outside  creditors  either 
one  way  or  the  other.  An  agreement  that  a  partnership  shall  date 
from  a  time  past  does  not  inure  to  the  benefit  of  creditors,  and  an 
agr^^ement  that  it  shall  date  from  a  time  future  does  not  prejudice 
their,  if  in  fact  the  parties  act  as  partners  before  such  time  ar- 
rives.'* 
Sam£ — Formal   Contract   to  he  Drawn    Up. 

It  occasionally  happens  that  an  agreement  for  a  partnershiT)  is 
drawn  up  and  signed,  but  a  more  formal  instrument  is  intended 
to  be  executed.  If,  in  a  case  of  this  sort,  the  execution  of  the 
formal  instrument  is  delayed,  the  commencement  of  the  partnership 
is  not  necessarily  delayed  also.  Whether  it  is  or  is  not  must  de- 
pend on  the  terms  of  the  preliminary  agreement ;  for  by  that  agree- 
ment the  parties  are  bound,  and  its  terms  will  regulate  their  rights 
and  obligations  inter  se  so  long  as  the  more  formal  instrument  is 
unexecuted." 

»2  8  Ch.  Div.  129. 

«»  Guice  V.  Thornton,  76  Ala.  466;   Williams  t.  Jones,  5  Bam.  &  C.  108. 
84  Vere  v.  Ashby,  10  Barn.  &  C.  2SS;    Battley  v.  Lewis,  1  Man.  &  G.  155. 
«B  England  v.  Curling,  8  BeaT.  129,  133. 


§   88)  USUAL    CLAUSES    IN    ARTICLES.  199 

Duratio7i  of  Partnership. 

The  period  for  which  the  relation  is  to  endure  should  be  stated 
in  the  articles,  but,  notwithstanding  its  being  so  stated,  a  dissolu- 
tion of  the  firm  may  take  place  before  the  end  of  the  term  stated 
Death  or  bankruptcy  of  a  partner,  marriage  of  a  feme  sole  partner, 
the  outbreak  of  war  between  countries  of  which  the  partners  are 
respectively  residents,  each  would  work  such  a  dissolution.^^  Be- 
sides this,  any  partner  is  at  liberty,  of  course,  to  petition  the  court 
for  a  dissolution  at  any  time,  and,  upon  sufficient  cause  shown, 
dissolution  will  be  decreed,  without  regard  to  the  term  stipulated 
for  in  the  articles."^  If,  notwithstanding  the  articles  and  the  time 
therein  set  forth  for  the  expiration  of  the  relation,  the  partners  go 
on  with  the  business  without  formulating  new  articles,  the  relation 
becomes  a  partnership  at  will;  but  the  old  articles,  in  default  of 
new  ones  being  agreed  upon,  control  the  relation  thereafter  exist- 
ing, except  in  respect  of  the  provision  as  to  when  the  relation  is 
to  expire."  If  the  time  for  which  the  partnership  is  to  endure 
is  not  limited  to  a  definite  period,  either  expressly  or  by  necessary 
implication,  the  partnership  may  be  dissolved  at  the  will  of  any 
partner.^^ 

The  Name  or  Style  of  the  Firm. 

The  agreement  between  partners  upon  the  point  as  to  what  shall 
be  the  name  or  style  under  which  the  partnership  business  shall  be 
transacted  governs  the  parties,  so  that  any  one  partner,  by  sign- 
ing any  instrument,  to  which  the  agreement  might  be  held  to  refer, 
in  any  other  way  than  in  the  firm  style  so  agreed  upon,  does  not 
necessarily  bind  the  firm.""  Collyer  says:  *^  "^Miere  the  members 
of  a  partnership  contract  by  covenant  that  the  firm  shall  be  A.,  B., 

C.  &  D.,  it  is  a  breach  of  that  covenant  for  A.  to  sign  those  instru- 
ments to  which  the  covenant  refers  in  the  name  of  A.  &  Co.  So, 
also,  strictly  speaking,  it  is  no  less  a  breach  of  that  covenant  for 

D.  to  sign  his  own  nam(>,  adding  'for  Self  and  Partners.' "  Lindley 
says:"     "The  name  or  style  of  the  firm  should  be  expressed,  and 

«8  See  post,  p.  393  et  seq.  87  gee  post,  p.  404.  «8  See  ante,  p.  195. 

88  Xeilson  v.  Iron  Co.,  11  App.  Gas.  298;    Featherstonhaugh  v.  Fenwiek,  IT 
Ves.  307. 
*o  See  post,  p.  237  et  seq.  4i  (Wood's  Ed.)  §  158.  iz  Paitn.  413. 


200  ARTICLES    OF    PARTNERSHIP.  (Ch.  5 

it  should  be  declared  that  no  partner  shall  enter  into  an  encrajxe- 
ment  on  behalf  of  the  firm  except  in  its  name.  Such  an  agree- 
ment is  capable  of  being  enforced,  and  it  may  be  of  use  in  deter- 
mining, as  between  the  partners,  whether  a  given  transaction  is 
to  be  regarded  as  a  partnership  transaction  or  not." 

Capital^    Advances^  etc. 

The  contributions  to  the  capital  of  a  firm  should  be  expressed  in 
money  only,  and,  if  one  or  more  partners  propose  to  put  in  lands 
or  something  else,  the  value  thereof  in  money  should  be  estimated, 
and  the  contribution  be  expressed  accordingly.  Otherwise  there 
will  always  be  confusion  in  the  accounting,  besides  which  the  con- 
tributing partner  will  be  disposed  to  regard  the  property  as  his, 
and  not  the  firm's.*' 

Same — Good  Dehts. 

If  the  contribution  is  made  in  "good  debts,"  and  the  debtor  from 
thenceforward  trades  with  the  firm,  payments  made  by  him  without 
its  being  si)ecified  upon  what  account  they  are  to  be  applied  will 
be  construed  as  made  upon  the  debts  contributed,  until  these  are 
all  paid."  And,  if  the  debts  so  contributed  realize  more  than  the 
figure  at  which  they  are  estimated  in  making  the  contribution,  the 
surplus  becomes  part  of  the  contributor's  capital,  and  not  profits 
of  the  firm." 

Same — Conditions  Preced^mt. 

When  the  articles  provide  that  each  partner  shall  bring  in  so 
much  capital,  or  do  some  other  specified  thing,  the  question  some- 
times arises  how  far  the  fulfillment  by  each  of  his  obligations  is 
a  condition  precedent  to  his  right  to  call  for  fulfillment  by  the  others 
of  their  obligations.  The  rules  laid  down  in  the  well-known  note 
to  Pordage  v.  Cole  *«  must  be  applied  to  all  such  cases.  These  rules 
are  as  follows: 

"(1)  If  a  day  be  appointed  for  payment  of  money,  or  part  of  it, 
or  for  doing  any  other  act,  and  the  day  is  to  happen,  or  may 
happen,  before  the  thing  which  is  the  consideration  of  the  money 

*8  2  Lindl.  Partn.  415. 
4*  Toulmin  t.  Copland,  2  Clark  &  F.  68t 
«B  Cooke  V.  Beabow,  3  De  Gez,  J.  &  S.  l. 
to  1  Saund.  320a. 


§    88)  USUAL    CLAUSES    IN    ARTICLES.  201 

or  other  act  is  to  be  performed,  an  action  may  be  broiij^ht  for  tlie 
money,  or  for  not  doin^  such  other  act  before  performance;  for 
it  appears  that  the  party  relied  upon  his  remedy,  and  did  not  in- 
tend to  make  the  performance  a  condition  precedent;  and  so  it 
is  where  no  time  is  fixed  for  performance  of  that  which  is  the 
consideration  of  the  money  or  other  act. 

"(2)  When  a  day  is  appointed  for  the  payment  of  money,  etc., 
and  the  day  is  to  happen  after  the  thing  which  is  the  consideration 
of  the  money,  etc.,  is  to  be  performed,  no  action  can  be  maintained 
for  the  money,  etc.,  before  performance. 

"(3)  WTiere  a  covenant  goes  only  to  part  of  the  consideration  on 
both  sides,  and  a  breach  of  such  covenant  may  be  paid  for  in  dam 
ages,  it  is  an  independent  covenant;  and  an  action  may  be  main- 
tained for  a  breach  of  the  covenant  on  the  part  of  the  defendant, 
without  averring  performance  in  the  declaration. 

"(4)  But,  where  the  mutual  covenants  go  to  the  whole  consider- 
ation on  both  sides,  they  are  mutual  conditions,  and  the  perform 
ance  must  be  averred. 

"(5)  Where  two  acts  are  to  be  done  at  the  same  time,  as  where 
A.  covenants  to  convey  an  estate  to  B.  on  such  a  day,  and,  in  con 
sideration  thereof,  B.  covenants  to  pay  a  sum  of  money  on  the 
same  day,  neither  can  maintain  an  action  without  showing  per 
formance  of,  or  an  offer  to  perform,  his  part,  though  it  is  not  cer- 
tain which  of  them  is  obliged  to  do  the  first  act;  and  this  partic- 
ularly applies  to  all  cases  of  sale." 

In  conformity  with  these  rules,  it  was  held  in  Stavers  v.  Curl- 
ing*^ that  the  plaintiff  who  had  covenanted  to  proceed  on  a  whal- 
ing voyage,  and  to  obey  the  instructions  of  the  defendants,  but  who 
had  not  obeyed  them,  could  nevertheless  maintain  an  action  against 
them  for  the  share  of  the  profits  which  they  had  covenanted  to 
pay  him,  although  they  had  only  covenanted  to  pay  him  on  the 
performance  by  him  of  his  covenants.  So,  in  Kemble  v.  Mills,** 
where  two  persons  had  agreed  to  become  partners,  and  one  of  them 
was  to  bring  in  £2,000,  and  do  certain  things,  and  the  other  was 
to  bring  in  £5,000,  it  was  held  that  an  action  lay  for  nonpayment 

«T  3  Bingr.  N.  O.  355. 

4a  e  DowL  446.     But  see  Maxsden  t.  Moore,  4  Hurl.  &  N.  500. 


202  ARTICLES    OF    PARTNERSHIP.  (^Ch.   5 

of  tlie  £5.000,  althon.irh  the  j)laintiff  did  not  state  that  lie  liad  1)rou;::'it 
in  his  £2,000,  or  had  done  any  other  of  the  acts  which  he  had  agreed 
to  do. 

Same — Unpaid  Contributions. 

If  a  partner  does  not  pay,  upon  the  inception  of  the  business,  the 
full  amount  of  his  share  of  the  capital,  he  becomes  at  once  a  debtor 
to  the  firm,  to  the  extent  of  what  remains  unpaid  thereon.  In  Ak- 
hurst  V.  Jackson  *•  a  trader  agreed  to  take  two  persons  into  part- 
nership, upon  the  consideration  of  their  paying  in  installments  a 
certain  sum.  Becoming  bankrupt  after  one  of  the  installments 
had  been  paid,  his  assignees,  it  was  held,  were  entitled  to  receive 
all  the  subsequent  installments. 

Same — Interest  on  Capital^  Advances^  and   Withdrawals, 

If  any  interest  is  to  be  allowed  on  capital  and  advances,  it  should 
be  by  virtue  of  some  express  provision  in  the  articles.  It  should  be 
paid,  too,  before  the  profits  are  ascertained,  and  the  interest  on 
advances  should  be  paid  before  that  on  capital.'** 

The  articles  usually  provide  for  the  withdrawal  by  the  individual 
partners,  at  stated  intervals,  of  money  for  their  subsistence.  Such 
clause  should  also  provide  for  the  payment  by  these  partners  of 
interest  on  the  excess  of  actual  withdrawals  over  the  figures  fixed  as 
Ihe  amounts  to  be  withdrawn.'* 

Same — Indemnity  for  Loss  to  Partnefr. 

As  an  inducement  to  secure  the  participation  of  one  or  more  per- 
sons in  forming  a  partnership,  it  is  frequently  agreed  that  such 
persons  be  secured  or  indemnified  for  any  loss  accruing  to  them  in 
respect  to  their  contributions  to  the  capital.  Lindley  tells  us  that 
"there  is  nothing  to  prevent  one  or  more  partners  from  agreeing  to 
indemnify  the  others  against  loss,  or  to  prevent  full  eff(?ct  from  be- 
ing given  to  a  contract  of  partnership  containing  such  a  clause  of 
indemnity."  '^ 

*»  1  Swanst.  85. 

80  2  Lindl,  Partn.  418.     And  see  ante,  p.  168. 
»i  Payne  v.  Freer,  91  N.  Y.  43. 

82  1  Lindl.  Partn.  15,  citing  Clift  v.  Barrow,  108  N.  T.  187,  15  N.  B.  327; 
Geddea  t.  WaUace,  2  BUgh,  270;    Bond  t.  Pittard,  3  Mees.  &  W.  357. 


^   ^^^  USUAL    CLAUSES    IN    ARTICLES.  203 

Rights  of  Partners  in  Firm  Property. 

The  articles  should  always  specify  what  is  and  what  is  not  part- 
nership property  under  the  agreement  of  the  partners;    for  it  fre- 
quently happens  that  the  firm  contemplates  the  use  in  some  way 
of  property  belono-ing  exclusively  to  one  or  more  of  the  pai-tners 
who  do  not  propose,  by  entering  into  the  relation,  to  donate  such 
property  to  all  the  partners.     It  should  also  be  provided  that    as 
between  the  real  and  personal  representatives  of  any  partner  who 
might  die  during  the  term,  the  shai-e  of  such  partner  in  the  part- 
nership real  estate  is  to  go  to  the  latter.     If  the  firm  is  to  make 
expenditures  upon  the  property  of  a  partner,  the  articles  should  stip- 
ulate for  a  lien  in  favor  of  the  firm  on  such  property  for  compensa- 
tion.»='     It  should  be  expressly  stipulated,  also,  as  to  what,  if  any 
benefit  the  firm  is  to  receive  from  the  emoluments  of  an  office  held 
by  one  partner."     So,  likewise,  provision  should  be  made  as  to  how 
the  profits  of  a  patent,  secret,  or  device  of  one  partner  shall  be 
dmded  among  all  the  partners  of  a  firm  organized  to  push  or  work 
such  patent,  secret,  or  device,  and  what  restraints  the  individual 
partner  shall  be  subjected  to  in  regard  to  it." 
Division  of  Profit. 

The  profits  of  the  business  are  usually  divided  among  the  partners 
according  to  their  respective  shares,  but,  if  there  is  no  reference  in 
the  articles  to  the  amount  of  shares  of  the  respective  partners  the 
r-ule  IS,  that  all  the  pa^tn^M•^,  partir-ipate  o^^v,x\\y  in  the  profits." 
Duties  Resting  upon  Partners. 

The  duties  of  the  several  partners  should  be  defined  in  the  arti- 
cles, although  they  arise,  of  course,  from  the  connection  of  the  part- 
ner to  the  firm,  rather  than  from  any  stipulation  between  them 
It  IS  customary  to  provide  for  the  mutual  good  faith  of  the  part.- 
ners,-that  they  will  be  true  and  just  to  each  other  in  their  deal- 
ings, etc.;   but  this  provision,  as  Lindley  says,"  is  of  service  mere- 

"  See  Bank  of  England  Case,  3  De  Gex,  F.  &  J.  645;    Pawsey  y   Armstrong   IS 
Oh.  Div.  698;    Burdon  v.  Barkus.  3  Giff.  412.  Armstrong.  18 

"  Ambler  r.  Bolton.  L.  R.  14  Eq.  427;    Smith  v.  Mules,  9  Hare.  556-    Collins 

y.  Jackson.  31  Beav.  645.  '    ^ '"'"** 

"  Morison  v.  Moat.  9  Hare.  241.  »e  gee  ante.  p.  138.  .r  2  Partn.  418. 


204  ARTICLES    OF    PARTNERSHIP.  {Ch.   6 

ly  as  a  reminder  to  the  partner.  It  has  no  legal  effect,  although  an 
effort  was  once  made  to  give  such  an  effect  to  it  that  an  indebt- 
edness of  one  partner  to  another  might  be  rendered  by  force  of  it 
a  specialty."'  It  should  be  stipulated  what  amount  of  attention  to 
the  affairs  of  the  partnership  each  partner  is  expected  to  give,  par- 
ticularly where  more  of  such  attention  is  required  of  one  than  an- 
other."^® In  no  case  can  absence  or  inattention  on  account  of  illness 
be  regarded  as  a  breach  of  the  agreement  on  the  part  of  a  partner.'" 
Partners  are  usually  restricted  by  the  articles,  in  regard  to  certain 
acts,  unless  done  with  the  sanction  of  the  entire  firm,  e.  g.  releas- 
ing firm  debts;  speculating  with  firm  funds;  becoming  surety; 
drawing,  accepting,  or  indorsing  bills,  except  in  the  course  of  busi- 
ness, etc.'^ 
Keeping  Books  of  Account. 

The  keeping  of  proper  books  of  account  is  usually  provided  for 
by  the  articles,  and  also  the  assurance  that  they  shall  be  open  to  the 
scrutiny  of  any  of  the  partners.  And  yet  the  right  of  a  partner  to 
scrutinize  the  books  exists  even  where  it  is  not  so  provided  for,  and 
the  denial  of  such  a  right  to  a  partner  is  something  for  which  he 
would  be  entitled  to  complain  in  any  event.  It  is  usual  to  provide 
that  they  be  kept  at  the  place  of  business,  lest  some  dispute  should 
arise  among  the  partners  as  to  which  one  of  them  should  have  the 
custody  of  them,  in  which  event  the  others  might  not  have  all  de- 
sirable access  to  them." 

5  8  Powdrell  v.  Jones,  2  Smale  &  G.  305. 

B9  See  McFerran  v.  Filbert,  102  Pa.  St.  73. 

60  See  Robinson  v.  Davison,  L.  R.  6  Exch.  209;    Boast  v.  Firth,  L.  R.  4  C.  P.  1. 

ei  Ritter  v.  Galitzenstein,  13  Daly  (N.  Y.)  452;    2  Lin.ll.  Partn.  419. 

8  2  McCall  V.  Moss,  112  111.  493.  A  partner,  who,  under  the  articles  of  partner- 
ship, is  entitled  to  the  use  of  the  books  of  the  firm,  cannot  be  restrained  from 
making  extracts  or  copies  therefrom  (e.  g.  of  the  names  and  addresses  of  cus- 
tomers), even  if  he  intends  to  use  such  extracts  or  copies  after  the  dissolution  of 
the  firm,  and  in  competition  with  his  co-partners  in  setting  up  a  business  similar 
to  that  which  the  partnership  carries  on;  and  the  fact  that  the  good  will  is  the 
exclusive  property  of  the  other  partnera  makes  no  difference.  Trego  v.  Hunt 
[1895]  1  Ch.  462,  12  Reports,  178. 


^    ^^)  USUAL    CLAUSES    IN    ARTICLES.  205 

Agreement  not  to   Carry  on   Other  or  C(mipeting  Business. 

The  articles  usually  provide  that  no  one  of  the  partners  shall  ex- 
ercise on  his  own  account  the  same  trade  as  that  of  the  firm.^^ 
But  this  restraint,  it  has  been  held,  does  not  affect  his  right  to  can- 
vass for  future  business.^*  If,  after  covenanting  not  to  go  into 
any  business  other  than  that  of  the  partnership,  one  partner, 
with  the  consent  of  the  others,  does  go  into  another  business  firm, 
the  articles  and  the  consent  so  given  will  not  have  the  effect  of 
making  all  the  partners  in  the  former  firm  partners  in  the  latter  firm 
also.«°  But  it  might  be  otherwise  if  the  one  partner  entered  into 
the  other  firm  in  defiance  of  the  articles,  and  without  the  consent 
of  his  co-partners.««  The  restraint  would  not  extend  to  the  partners 
going  into  a  business  of  a  kind  different  from  that  of  the  firm,  un- 
less it  was  so  specifically  expressed  in  the  articles. 
Decision  of  Differences  hy  Majority. 

The  question  as  to  how  far,  and  in  what  respects,  the  members  of 
the  firm  are  to  be  controlled,  if  at  all,  by  a  majority  of  the  part- 
ners, is  sometimes  settled  in  advance  by  some  provision  in  the  ar 
tides;  and,  in  cases  where  there  are  many  members,  such  a  pro- 
vision is  very  necessary.  If  it  is  to  proposed  to  give  the  majority 
very  full  powers,  it  should  be  expressed  very  clearly  in  the  arti- 
cles; otherwise  the  effect  would  probably  fail,  through  the  inter- 
pretation of  some  other  provision  in  the  articles.'^ 
Annual  Accounts. 

The  articles  usually  provide  that  there  shall  be  an  annual  account 
of  the  property,  effects,  and  credits,  on  the  one  hand,  and  of  the 
debts,  on  the  other.     Where,  such  a  provision  being  present  in  the 
articles,  the  settlement  to  be  on  the  2oth  of  March,  and  another  pro- 
vision being  also  present,  to  the  effect  that  upon  the  death  of  a 
partner  his  estate  should  share  in  no  profits  earned  since  the  last 
prior  yearly  settlement,  a  partner  died  in  February,  1813,  there  hav- 
es See  Starr  t.  Case,  59  Iowa,  491,  13  N.  W.  645;    Dean  t.  MacdowelL  8  Ch 
Div.  345. 
8*  Coates  V.  Coates,  Madd.  &  GeL  287. 
•»  Bosanquet  v.  Wray,  6  Taunt.  597. 
««  Somerville  v.  MacKay,  16  Ves.  382. 

6  7  Falkland  v.  Cheney,  5  Brown  Pari.  Cas.  476.     As  to  the  Implied  powers  of  a 
majority,  see  ante,  p.  158. 


206  ARTICLES    OF    PARTNERSHIP.  (Ch.   5 

ing  been  no  account  had  since  November  5,  1811,  the  court  held  that 
the  estate  should  share  in  profits  up  to  the  5th  of  November,  1812." 
These  accounts  should  make  the  condition  of  the  firm  appear  (1) 
as  to  third  persons,  and  (2)  as  to  the  component  members  of  the 
firm,  and  the  articles  should  require  them  to  be  so  prepared."* 

General  Account  upon  Dissolution. 

The  articles  usually  provide,  also,  for  a  general  account,  which 
shall  be  made  upon  the  dissolution  of  the  partnership,  and  the  wind- 
ing up  of  its  business  and  distribution  of  its  property. 

There  are  two  methods  of  winding  up  the  business  upon  dissolu- 
tion:^" (1)  By  a  general  conversion  of  the  property  and  effects 
into  money,  and  a  division  of  this  money  between  the  partners;  (2) 
by  one  partner  taking  the  whole  upon  a  valuation,  and  paying  to 
the  other  partners  their  shares.  The  former  is  the  method  pursued 
by  courts  of  equity,  in  the  absence  of  a  stipulation  to  the  other  ef- 
fect, in  settling  the  affairs  of  a  partnership.  The  latter  is  usually 
stipulated  for  in  the  articles.  But  it  ha.s  been  said  that  a  stipnla 
tion  giving  the  partners  of  one  who  becomes  bankrupt  the  right  to 
take  his  share  at  a  valuation,  and  pay  for  it  in  installments  in  the 
course  of  years,  is  void,  because  It  would  give  a  partner  power  to 
control  by  contract  the  disposition  of  his  property  in  the  event  of 
his  bankruptcy.''* 

Same —  Good   Will. 

This  provision  of  the  articles  should  also  go  to  the  proper  dis 
position  of  the  good  will  of  the  business. 

Representatwes  Succeeding  to  Deceased  Partner^s  Share. 

It  is  often  provided  by  the  articles  that  a  share  of  a  partner 
in  the  business  shall  not  be  taken  out  upon  his  death,  nor  shall 
I  lie  latter  event  have  the  effect  of  dissolving  the  partnership,  but 
that  his  executors  or  his  representatives  shall,  as  such,  assume  his 

•8  Pett3rt  ▼.  Janeson,  Madd.  &  Gel.  146. 

6  9  Sop  2  Llndl.  Partn.  420.  As  to  the  conclnslTeness  of  acconnts.  see  London 
Financial  Ass'n  v.  Kelk,  26  Ch.  Div.  107,  151;  Oldaker  v.  Lavender,  6  Sim. 
239;  Blissct  v.  Daniel,  10  Hare,  493;  Ex  parte  Barber,  5  Ch.  App.  687;  Laing 
V.  Campbell,  36  Beav.  3;   Wade  v.  Jenkins,  2  Giff.  509. 

7  0  tiJee  post,  p.  408. 

»i  1  Colly.  Partn.  (Wood's  Ed.)  §  173.      Gf.  Rigden  t.  Pierce,  Madd.  &.  Gel.  353. 


§   88)  USUAL    CLAUSES    IN    ARTICLES.  207 

place  and  share,  and  the  business  shall  proceed  as  if  no  death  had 
occurred.^^  This  provision  is  upheld  by  courts  of  equity  when  it 
appears  to  have  been  made  for  the  purpose  of  perpetuating  the  part- 
nership. 

Where  the  articles  give  a  partner  the  power  of  appointment,  by 
will,  of  the  person  to  whom  his  share  shall  go,  the  courts  will  up- 
hold that  provision,  too.  In  Penton  v.  Dunn,^'  where  the  testator, 
without  any  specific  reference  to  this  power,  had  merely  given  all 
his  estate  to  one  of  his  children,  it  was  held  that  the  testator's 
interest  in  the  partnership  passed  by  this  bequest.  Such  provisions, 
however,  are  not  held  to  make  it  obligatory  upon  the  representa- 
tives of  deceased  partners  to  accept  these  shares,  they  still  remain- 
ing in  the  business,  but  merely  to  leave  it  to  the  option  of  such' 
representatives  to  so  do  if  they  see  fit.^*  But  these  representa- 
tives must  give  notice,  within  a  reasonable  time,  if  they  are  not 
disposed  to  continue  the  partnership;  otherwise  they  will  be  con- 
sidered partners.""*  In  all  cases,  however,  they  must  be  allowed  a 
reasonable  time  within  which  to  acquaint  themselves  with  the  busi- 
ness, so  as  to  be  in  a  position  to  come  to  a  judicious  determination 
as  to  the  course  to  be  pursued  by  them. 

Retirement  of  Partner  and  Assignment  of  Share. 

Unless  the  articles  provide  for  the  retirement  of  partners  before 
the  end  of  the  term  of  the  partnership,  all  the  members  of  the  firm 
must  remain  so  until  such  end,  except,  of  course,  that  any  one  of 
them  may,  for  cause,  petition  a  court  of  equity  to  decree  a  disso- 
lution, and  may,  too,  assign  his  share,  which  would  dissolve  the 
partnership,  under  the  principle  of  delectus  personarum.^® 

But  the  articles  may  provide  for  this  premature  retirement  of  a 
partner.  When  they  do,  they  should  set  forth,  also,  upon  what 
terms  such  a  retirement  shall  be  allowed.  A  partner  may,  if  the 
articleg  so  provide,  sell  his  share,  and  the  articles  may  or  may  not 
impose  restrictions  upon  such  sale.  The  mere  giving  him  the  right 
to  sell  the  share,  however,  does  not  necessarily  carry  with  it  any 

7  2  See  post,  p.  397,  and  Page  v.  Cox,  10  Hare,  163. 
T8  1  Russ.  &  M.  402. 

T4  Pigott  V.  Bagley,  McClel.   &  Y.  569;    Madgwick  t.   Wimble,  6  Beav.   495; 
Downs  V.  Collins,  6  Hare,  418;    Page  v.  Cox,  10  Hare,  163. 
7B  Pigott  T.  Bagley,  McClel.  &  Y.  569.         le  See  post.  p.  397. 


208  ARTICLES    OF    PAKTNEKSHIP.  CCh.   5 

right  to  the  purchaser  to  take  part  in  the  firm  business,  nor  does 
it  necessarily  impose  upon  him  firm  obligations.^^  However,  the 
partner  selling  agreeably  to  the  articles  has  but  to  give  to  the  firm 
proper  notice  of  what  he  has  done,  and  he  then  ceases  to  be  a  mem- 
ber of  the  firm.^^  If  it  is  required  by  the  articles  that  a  partner 
availing  himself  of  such  a  provision  must  offer  his  share  to  the 
other  partners  before  selling  it  to  a  stranger,  any  one  of  the  con- 
tinuing partners  may  validly  purchase  it  for  himself."  If  the  ar- 
ticles require  that  the  offer  must  be  made  first  to  the  partners  col- 
lectively, then  to  such  as  are  disposed  to  purchase,  and  then  to 
the  individual  partners,  an  offer  to  all  the  others  would  be  equiv- 
alent to  the  three  offers  in  the  order  mentioned.*" 

Same  —  What  is  Proper  Notice  of  Intention  to  Sell  Share. 

Notice  given  in  any  such  manner  as  to  meet  the  attention  of  all 
the  partners  would  be  sullicient.  Thus,  it  was  held  to  be  sufficient 
when  the  partner  desiring  to  sell  wrote  notice  of  his  intention 
in  a  book  to  which  all  the  partners  had  access,  and  which  was  con- 
sulted at  all  monthly  firm  meetings;  and  in  a  case  where  the  ar- 
ticles required  the  notice  to  be  given  at  a  monthly  meeting,  and  one 
month  previous  to  the  sale.** 

Same — Covenant  of  Indemnity. 

It  is  provided  often,  in  connection  with  the  clause  looking  to  the 
retirement  of  a  partner,  that  the  latter  shall,  after  such  retirement, 
be  indemnified  against  the  losses  of  the  firm.  If,  at  his  retirement, 
his  share  is  assigned  to  the  firm  itself,  prudence  would  dictate  hia 
requiring  a  covenant  to  that  effect  at  the  time,  without  reference  to 
the  articles.*' 
Provision,  for  Expulsion. 

A  provision  for  the  expulsion  of  a  member  finds  a  place  in  the 
articles,  as  a  rule,  but  applies  to  but  few  cases, — those,  to  wit,  when 

7  7  Lovegrove  v.  Nelson,  3  Mylne  &  K.  20;   Jefferys  v.  Smith,  3  Russ.  158.    And 
Bee  1  Lindl.  Partn.  365. 
7  8  See  Glassington  v.  Thwaites,  Coop.  t.  Brough.  115. 

T»  Cassels  v.  Stewart,  6  App.  Cas.  64.     Cf.  M'Glensey  t.  Cox,  5  Pa.  Law  J.  203. 
•0  Homfray  T.  Fothergill,  L.  R.  1  Eq.  567. 
•  1  Glassington  t.  Thwaites,  Coop.  t.  Brough.  115. 
•s  See  Saltoun  t.  Houstoun,  1  Bing.  ^33. 


§   88)  USUAL    CLAUSES    IN    ARTICLES.  209 

the  partner  has  done  acts  to  the  decided  prejudice  of  the  partner- 
ship agreement.  Insolvency  would  be  such  an  act  (that  is,  an  in- 
ability to  pay  his  debts);  it  not  being  necessary  to  wait  until  he 
had  made  an  assignment,  or  anything  of  that  sort,  in  order  to  at- 
tach such  a  character  to  the  act.^^  Such  a  provision  is  very  strict- 
ly construed,  however,  and  it  must  always  appear  that  the  power  of 
expulsion  is  exercised  bona  fide.^* 

When,  under  the  articles,  the  firm  was  at  liberty  to  dissolve  the 
partnership  as  to  any  particular  partner  who  might  do  any  specified 
act,  the  provision  would  not  have  the  effect  of  restraining  his  doing 
the  act,  if  he  might  be  so  inclined,  but  only  to  bring  the  dissolu- 
tion on  him,  as  a  consequence,  if  his  partners  should  choose  to  have 
it  so."  The  expulsion  will  never  be  allowed  when  the  objectionable 
partner  has  not  been  permitted  to  explain  himself."  The  articles 
should  provide,  too,  for  the  number  of  partners  necessary  to  act 
together  to  expel  the  members,  and  only  the  co-operation  of  this 
number  can  then  effect  the  expulsion. 

Arhitration. 

Another  very  usual  and  essential  feature  in  the  articles  is  a  pro- 
vision that  the  disputes  and  differences  that  may  from  time  to  time 
arise  among  the  partners  shall  be  submitted  to,  and  settled  by,  ar- 
bitration.^^ 

As  to  the  powers  of  an  arbitrator,  if  the  matter  submitted  em- 
brace all  the  differences  between  the  partners  he  may  direct  that 
the  partnership  be  dissolved;  and,  if  the  terms  of  dissolution  are 
left  to  him,  he  may  make  any  of  the  ordinary  terms  that  may  seem 
to  him  appropriate." 

83  Hubbard  v.  Guild,  1  Duer  (N.  Y.)  662;  Blisset  v.  Daniel,  10  Hare,  493.  And 
6ee  Russell  v.  Russell,  14  Ch.  Div.  471;   Steuart  v.  Gladstone,  10  Oh.  Div.  626. 

8*  See  post,  p.  401. 

8  5  Mills  V.  Osborne.  7  Sim.  37. 

88  Lindl.  Partn.  427. 

8T  Page  V.  Vankirk,  6  Phila.  (Pa.)  264;  Meaher  v.  Cox,  37  Ala.  201;  Agar  v. 
Macklew,  2  Sim.  &  S.  418;  Street  v.  Rigby,  6  Ves.  815,  818;  Livingston  v.  Ralli, 
5  El.  &  Bl.  132. 

88  Hutchinson  v.  Whitfield,  Hayes,  78;    Green  v.  Waring,  1  W.  Bl.  475,    Sim- 
tionds   V.   Swaine,   1   Taunt.  549;    Lingood   v.   Eade,   2   Atk.  505;    Wilkinson   t. 
Page,  1  Hare,  276;    Wood  v.  Wilson,  2  Cromp.  M.  &  R.  241. 
GEO.PART.— 14 


210  ARTICLES    OF    PARTNERSHIP.  (Ch.   5 

Liquidated  Damages. 

The  usual  last  clause  in  the  articles  of  partnership  provides  for 
payment  bj  an  offending  partner  to  the  others  of  a  sum  of  money, 
as  liquidated  damages,  in  case  of  any  breach  of  the  covenants 
contained  in  the  articles."  Such  a  provision  is  important  only 
where  the  breach  of  the  covenant  is  itself  not  liable  to  be  indicative 
of  some  certain  loss  to  the  firm;  for  if  it  is  thus  indicative,  the  in- 
nocent partner  has  his  action  against  the  offender  for  the  amount 
of  loss  so  caused  him.  But  Collyer  says:  *"  "It  seems,  however, 
that  this  proposition  must  not  be  extended  to  the  case  when  the 
damages  to  be  recovered  are,  of  necessity,  payable  out  of,  or,  when 
recovered,  payable  into,  the  partnership  fund,  because  in  this  case 
the  party  bringing  the  action  is  liable  to  contribute  to  the  fund  out 
of  which  he  seeks  payment." 

so  Soo  Hnlp.  l>!im.  c.  4.  ••  Partn.  p.  245. 


§    89  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.                       211 

CHAPTER  VI. 

RIGHTS  AND  LIABILITIES  AS  TO  THIRD  PERSONS. 

89.  Power  of  Partner  to  Bind  Firm. 

90.  Express  Authority. 
01-93.  Implied  Authority. 

94.  Particular  Powers. 

95.  Sealed  Instrument*. 

96.  Bills  and  Notes. 

97.  Borrowing. 

98.  Simple  Contracts. 
89.  Buying  and  Selling. 

100.  Notice. 

101.  LiaWIities  of  Partners  to  Third  PersoniL 

102.  In  Contract. 

103.  Restrictions  by  Dissent. 

104.  Form  of  Contract. 

105.  In  Tort. 

106-108.  Joint  and  Several  Liability. 

109.  Extent  of  Liability. 

110.  Beginning  of  Liability. 

111.  Incoming  Partners. 
112-114.  Assumption  of  Debt*. 

115.  Termination  of  Liability. 

116.  Future  Acts. 

117.  Dormant  Partner. 

118.  Past  Acts. 

119.  Rights  in  Firm  and  Separate  Property. 

120.  Firm  Creditors  in  Firm  Property. 

121.  Partners  in  Firm  Property. 

122.  Separate  Creditors  in  Firm  Property. 

123.  Separate  Creditors  in  Separate  Property, 

124.  Firm  Creditors  in  Separate  Property. 

125.  Partners  in  Separate  Property. 

126.  Joint  and  Separate  Creditors  In  Firm  and  Separate  Property. 

POWER  OF  PARTNER  TO  BIND  FIRM. 

89.  The  power  of  a  partner  to  bind  the  firm  may  result 
from  either 

(a)  Express  authority  (p.  212),  or 

(b)  Implied  authority  (p.  213). 


212  RIGHTS    AND    LIABILITIES    AS    TO   THIRD    PERSONS.  (Ch.  6 

SAME— EXPRESS  AUTHORITY. 

90.  By  express  agreement  authority  may  be  conferred 
upon  one  partner  to  bind  the  firm  by  any  act  "wrhich 
would  be  binding  if  done  by  all  the  partners.  A 
subsequent  ratification  is  equivalent  to  antecedent 
authority. 

The  power  of  a  partner  to  bind  his  firm  in  transactions  with  third 
persons  is  to  be  determined  bj  the  general  principles  of  the  law  of 
agency.  Every  member  of  an  ordinary  partnership  is  its  general 
agent  for  the  transaction  of  its  busini'ss  in  the  ordinary  way,  and 
the  firm  is  responsible  for  whatever  is  done  by  any  of  the  partners 
while  acting  for  the  firm  within  the  limits  of  the  authority  con- 
ferred by  the  nature  of  the  business  it  carries  on.^  To  quote  from 
Pooley  V.  Driver:^  "Everybody  knows  that  partnership  is  a  sort 
of  agency,  but  a  very  peculiar  one.  You  cannot  grasp  the  notion 
of  agency,  properly  speaking,  unless  you  grasp  the  notion  of  the 
existence  of  the  firm  as  a  separate  entity  from  the  existence  of  the 
partners.  But  when  you  get  that  idea  cleai-ly,  you  will  see  at  once 
what  sort  of  an  agency  it  is.  It  is  the  one  person  acting  on  be- 
half of  the  firm.  He  does  not  act  as  agent,  in  the  ordinary  sense 
of  the  word,  for  the  others,  so  as  to  bind  the  others.  He  acts  on 
behalf  of  the  firm,  of  which  they  are  members;  and,  as  he  binds 
the  firm,  and  acts  on  the  part  of  the  firm,  he  is  properly  treated 
as  agent  of  the  firm." 

Of  course,  by  express  agreement,  any  power  may  be  conferred 
upon  a  partner  that  could  be  lawfully  exercised  by  all  the  part- 
ners, and  also,  as  between  themselves,  the  powers  of  a  partner 
may  be  limited  to  any  extent;  but,  as  will  be  seen,  such  limitations 
do  not  affect  third  persons  who  deal  with  such  partner  without 

1  Burgan  v.  Lyell,  2  Mich.  102;  Edwards  v.  Tracy,  62  Pa.  St.  374;  Blodgett 
T.  Weed,  119  Mass.  215;  Sage  v.  Sherman,  2  N.  Y.  417;  Pahlman  v.  Taylor,  75 
111.  629;  Fletcher  v.  Ingram,  46  Wis.  191,  50  N.  W.  424;  D.  S.  Bank  t.  Binney. 
5  Mason,  187.  Fed.  Cas.  No.  16,791. 

«  5  Gh.  DiT.  458,  470. 


§§    91-93)  IMPLIED    AUTHORITY.  213 

notice  of  the  limitation  of  his  powers,'     Ratification  is  equivalent 
to  antecedent  authority.* 


SAME— IMPLIED  AUTHORITY. 

91.  The  implied  authority  of  a  partner  to  bind  the  firm 
may  be  either 

(a)  Actual,  or 

(b)  Apparent. 

93.  Prima  facie,  a  partner  has  Implied  authority  to  bind 
the  firm  by  any  act  necessary  for  carrying  on  the 
business  in  the  ordinary  manner.  Unless  limited 
by  agreement  between  the  partners,  this  implied 
authority  is  actual;  when  it  is  so  limited,  such  au- 
thority is  only  apparent. 

93.  A  partner  has  power  to  bind  the  firm  by  any  act 
within  his  express  or  implied  authority,  either  ac- 
tual or  only  apparent,  provided  the  person  -with 
whom  he  deals  acts  bona  fide,  and  without  notice 
of  the  limitation  of  his  authority. 

The  po\rers  of  a  partner  are  largely  implied.  Partnership  ar- 
ticles are  usually  not  intended,  and  do  not  attempt,  to  define  all 
the  rights  and  duties  of  a  partner.  Much  is  left  to  be  understood 
and  implied.  So  far  as  they  are  not  expressly  declared,  they  are 
determined  by  general  principles,  which  are  always  applicable  when 
not  clearly  excluded. 

Briefly  expressed,  all  acts  done  by  a  partner  on  behalf  of  the 
firm  within  the  scope  of  its  business  are  acts  of  the  firm,  and  by 

8  Rice  V.  Jackson,  171  Pa.  St.  89,  32  AU.  1036;  Stark  t.  Corey,  45  lU.  431 ; 
Stimson  v.  Whitney,  130  Mass.  591;  Tradesmen's  Bank  v.  Astor,  11  Wend.  (N. 
Y.)  87.    And  see  post.  p.  236. 

*  Miller  v.  Glass  Works,  172  Pa,  St.  70,  33  AU.  350;  Russell  t.  Annable,  109 
Mass.  72;  Casey  v.  Carver,  42  111.  225;  Cotzhausen  v.  Judd,  43  Wis.  213;  Cor- 
bett  V.  Cannon  (Kan.  Sup.)  45  Pac.  80;  Pacific  Mut.  Life  Ins.  Co.  v.  Fisher,  109 
CaL  566,  42  Pac  150. 


214  RIGHTS    AND    LIABILITIKS    AS    TO    THIRD    PERSONS.  (Ch.   (5 

the  acts  of  the  firm  all  the  partners  are  bound/  The  phrase  "scope 
of  its  business"  means  whatever  is  usually  done  by  persons  engaged 
in  a  similar  business  at  the  same  time  and  place."  It  includes 
whatever  is  reasonably  necessary  to  carry  on  the  business  in  the 
ordinary  manner/  In  the  absence  of  express  limitation,  even  as 
between  themselves,  a  partner  has  a  right  to  bind  the  firm  to  this 
extent.  WTiere  there  is  an  express  agreement  limiting  a  partner's 
powers,  he  has  no  right  to  exceed  that  limit;  but,  if  be  does,  and 
the  person  with  whom  he  deals  has  no  notice  of  the  limitation,  the 
firm  is  nevertheless  bound,  if  the  act  was  within  the  scope  of  its 

•  Eastman  t.  Cooper,  15  Pick.  (Mass.)  276;  Livinjrston  t.  Roosevelt,  4  Johns. 
(N.  Y.)  251;  Mercein  v.  Andrus.  10  Wend.  (N.  Y.)  4G1;  Beardsley  v.  Tuttle.  11 
Wis.  74;    Bank  of  Ft.  Madison  v.  Aldeo,  129  U.  S.  372.  9  Sup.  Ct.  332. 

8  Irwin  V.  Williar,  110  U.  S.  499.  4  Sup.  Ct.  160;  Seaman  v.  Aschermao,  57 
WiB.  547,  15  N.  W.  788;    Lynch  t.  Hillstrom  (Minn.)  67  N.  W.  636. 

7  Banner  Tobacco  Co.  t.  Jenison,  48  Mich.  459,  12  N.  W.  055;  Garland  v. 
Uickey,  75  Wis.  178,  43  N.  W.  S:i2:  National  Exch.  Bank  v.  White,  30  Fed.  412; 
Summerlot  v.  Hamilton,  121  Ind.  87.  22  N.  E.  973;  Taylor  v.  Webster,  39  N.  J. 
Law,  102.  Chief  Justice  Marshall  said  in  this  connection:  "This  is  a  general 
power,  essential  to  the  well  conducting  of  business,  which  is  implied  in  the  exist- 
ence of  a  partnership.  When,  then,  a  partnership  is  formed  for  a  particular  pur- 
pose, it  is  understood  to  be  in  itself  a  grant  of  power  to  the  acting  members  of  the 
company  to  transact  its  business  in  the  usual  way.  If  that  business  be  to  buy 
and  sell,  then  the  individual  buys  and  sells  for  the  company,  and  every  person  with 
whom  he  trades  in  the  way  of  its  bosiness  has  a  right  to  consider  him  as  the  com- 
pany, whoever  may  compose  it.  It  is  u.sual  to  buy  and  sell  on  credit;  and,  if  it 
be  so,  the  partner  who  purchases  on  credit  in  the  name  of  the  firm  must  bind  the 
firm.  This  is  a  general  authority  held  out  to  the  world,  to  which  the  world  has 
a  right  to  trust.  The  articles  of  co-partnership  are  perhaps  never  published.  They 
are  rarely,  if  ever,  seen,  except  by  the  partners  themselves.  The  stipulations  they 
may  contain  are  to  regulate  the  conduct  and  rights  of  the  parties  as  between 
themselves.  The  trading  world,  with  whom  the  company  is  in  perpetual  inter- 
course, cannot  individually  examine  those  articles,  but  muBt  trust  to  the  general 
powers  contained  in  all  partnerships.  The  acting  partners  are  identified  with  the 
company,  and  have  power  to  conduct  its  usual  business  in  the  usual  way.  This 
power  is  conferred  by  entering  into  the  partnership,  and  is  perhaps  never  to  be 
found  in  the  articles.  If  It  is  to  be  restrained,  fair  dealing  requires  that  the  re- 
striction should  be  made  known.  These  stipulations  may  bind  the  partners,  but 
ought  not  to  affect  those  to  whom  they  are  unknown,  and  who  trust  to  the  gen- 
eral and  well-established  commercial  law."  Winship  v.  Bank,  5  Pet.  529,  560. 
See,  also,  Le  Roy  v.  Johnson,  2  Pet.  186;  Kimbro  ▼.  Bullitt,  22  How.  256; 
Wheeler  t.  Sage,  1  Wall.  518. 


§§    91-93)  IMPLIED   AUTHORITY.  215 

business,  because  every  partner  has  apparent  authority  to  bind 
his  firm  to  that  extent.®  "Whatever,  as  between  the  partners  them- 
selves, may  be  the  limits  set  to  each  other's  authority,  every  person 
not  acquainted  with  those  limits  is  entitled  to  assume  that  each 
partner  is  empowered  to  do  for  the  firm  whatever  is  necessary  for 
the  transaction  of  its  business  in  the  way  in  which  that  business 
is  ordinarily  carried  on  by  other  people."  •  But,  though  the  firm 
is  bound  in  such  a  case  to  the  third  person,  the  partner  so  exceed- 
ing his  authority  is  liable  to  his  co-partners  for  any  damage  result- 
ing from  his  breach  of  the  agreement.  Where  the  third  person  had 
notice  of  the  limitation  upon  the  partner's  authority,  the  firm  is, 
of  course,  not  bound. ^°  These  rules  are  relaxed  somewhat,  accord 
ing  to  any  usage  or  habit  the  firm  may  have  acquired,  inconsistent 
with  strict  limitations  in  the  partnership  agreement,  in  respect  to 
the  line  of  the  firm's  business.^* 

Necessity  the  Limit  of  Authority. 

It  will  be  observed  that  what  is  necessary  to  carry  on  the  part- 
nership business  in  the  ordinary  way  is  made  the  test  of  authority 
where  no  actual  authority  or  ratification  can  be  proved.  The  act 
of  one  partner  to  bind  the  firm  must  be  necessary  for  the  carrying 
on  of  its  business.  If  all  that  can  be  said  of  it  was  that  it  was 
convenient,  or  that  it  facilitated  the  transaction  of  the  business  of 
the  firm,  that  is  not  sufficient,  in  the  absence  of  evidence  of  sanc- 
tion by  the  other  partners.^' 

Same — Extraordinary  Necessity. 

Nor,  it  seems,  will  necessity  itself  be  sufiBcient,  if  it  be  an  ex- 
traordinary necessity.  What  is  necessary  for  carrying  on  the  busi- 
ness of  the  firm  under  ordinary  circumstances  and  in  the  usual  way 
is  the  test;^^    and  therefore,  in  a  case  where  the  nature  of  the 

8  Irwin  V.  Williar,  110  U.  S.  499,  4  Sup.  Ct.  160:  Hotchin  v.  Kent,  8  Mich.  526; 
Conely  v.  Wood,  73  Mich.  203,  41  N.  W.  259;  Wagnon  t.  Clay,  1  A.  K.  Marsh. 
(Ky.)  257. 

8  Lindl.  Partn.  124.      See  Morse  v.  Richmond,  97  111.  303, 

10  Bailey  v.  Clark,  6  Pick.  (Mass.)  372;  Boardman  t.  Gore,  15  Mass.  339;  En- 
sign T.  Wands,  1  Johns.  Cas.  171;    Wilson  v.  Richards,  28  Minn.  337,  9  N.  W.  872. 

11  Woodward  t.  Winship,  12  Pick.  (Mass.)  430. 

12  Dickinson  v.  Valpy,  10  Barn.  &  C.  128;    Ricketts  v.  Bennett,  4  C.  B.  686. 

i«  Russell  V.  Annable,  109  Maas.  72;    Barnard  t.  Road  Co.,  6  Mich.  274;    Cotz- 


216  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.  6 

business  was  one  in  which  there  was  no  necessity  to  borrow  money 
to  carry  it  on,  under  ordinary  circumstances  and  in  the  ordin;irv 
manner,  the  court  held  the  firm  not  liable  for  money  borrowed  by 
its  agent  under  extraordinary  circumstances,  althou^jh  money  was 
absolutely  requisite  to  save  the  property  of  the  firm  from  ruin.^* 
This  case  is  an  authority  for  saying  that  a  power  to  do  what  is 
usual  does  not  include  a  power  to  do  what  is  unusual,  however 
urgent;  and  although,  in  the  case  referred  to,  the  money  was  not 
borrowed  by  a  partner,  but  by  a  person  who  was  only  an  agent  of 
the  firm,  the  decision  would,  it  is  apprehended,  have  been  the  same 
if  he  had  been  a  partner.  For,  notwithstanding  the  fact  that  every 
partner  is  to  a  certain  extent  a  principal  as  well  as  an  agent,  the 
liability  of  his  co-partners  for  his  acts  can  only  be  established  on 
the  ground  of  agency.  As  their  agent  he  has  no  discretion,  ex- 
cept within  the  limits  set  by  them  to  his  authority;  and  the  fact 
that  he  is  himself,  as  one  of  the  firm,  a  principal,  does  not  warrant 
him  in  extending  those  limits,  save  on  his  own  responsibility. 

94.  PARTICUIiAR  POWERS— Whether  a  partner  has  im- 
plied authority  to  do  any  given  act  depends  upon 
the  nature  of  the  business  and  the  custom  of  per- 
sons engaged  in  it. 

The  question  whether  a  given  act  can  or  cannot  be  said  to  bo 
necessary  to  the  transnction  of  a  business,  in  the  way  in  which  it 
is  usually  carried  on,  must  evidently  be  determined  by  the  nature 
of  tile  business,  and  by  the  practice  of  persons  engaged  in  it.  Evi 
dence  on  both  of  these  points  is,  therefore,  necessarily  admissible, 
and,  as  may  readily  be  conceivL-d,  an  act  which  is  necessary  for  the 
prosecution  of  one  kind  of  business  in  the  ordinary  way  may  be 
wholly  unnecessary  for  carrying  on  another.  Consequently,  no 
answer  of  any  value  can  be  given  to  the  abstract  question,  can  one 
partner  bind  his  firm  by  such  and  such  an  act,  unless,  having  re- 
gard to  what  is  usual  in  business,  it  can  be  predicated  of  the  act 

hausen  t.  Judd,  43  Wis.  213;  Thomas  v.  Harding,  8  Me.  417;  Brettel  v.  Wil- 
liama,  4  Exch.  623. 

1*  Hawtayne  v.  Bourne,  7  Meea.  &  W.  5&5;    Ex  parte  Chippendale,  4  De  Gei, 
M.  &  G.  19. 


§    94)  PARTICULAR    POWERS.  217 

in  question  either  that  it  is  one  without  which  no  business  can  be 
carried  on,  or  that  it  is  one  which  is  not  necessary  for  carrying 
on  any  business  whatever.  There  are,  obviously,  very  few  acts  of 
which  any  such  assertions  can  be  truly  made.  The  great  majority 
of  acts,  and  practically  all  which  give  rise  to  doubt,  are  those  which 
are  necessary  in  one  business  and  not  in  another.  Take,  for  ex- 
ample, negotiable  instruments.  It  may  be  necessary  for  one  mem- 
ber of  a  firm  of  bankers  to  draw,  accept,  or  indorse  a  bill  of  ex- 
change on  behalf  of  the  firm,  and  to  require  that  each  member  should 
put  his  name  to  it  would  be  ridiculous;  but  it  by  no  means  follows, 
nor  is  it  in  fact  true,  that  there  is  any  necessity  for  one  of  several 
solicitors  to  possess  a  similar  power,  for  it  is  no  part  of  the  or- 
dinary business  of  a  solicitor  to  draw,  accept,  or  indorse  bills  of 
exchange.  The  question,  therefore,  whether  one  partner  can  bind 
the  firm  by  accepting  bills  in  its  name,  admits  of  no  general  an- 
swer. The  nature  of  the  business  and  the  practice  of  those  who 
carry  it  on, — usage  or  custom  of  the  trade, — must  be  known  before 
any  answer  can  be  given.^"  Nevertheless,  it  may  be  of  value  to 
notice  certain  usual  or  important  powers. 

Acts  not    Within  a  Partner^s  Implied  Powers. 

A  partner  may  not  enter  an  appearance,  so  as  to  bind  his  co- 
partners in  an  action  against  the  firm;"  nor  can  he  bind  them  by 
submission  of  a  firm  controversy  to  arbitration;^^  nor  by  a  con- 
fession of  judgment;*'  nor  by  an  assignment  for  the  benefit  of 
creditors,^'   though   such   assignment   will   bind   him   individually; 

IB  Boardman  v.  Adams,  5  Iowa,  224;  Hogarth  t.  Latham,  3  Q.  B.  Div.  643; 
Taunton  v.  Insurance  Co.,  2  Hem.  &  M.  135. 

18  Hall  V.  Lanning.  91  U.  S.  160;  Adam  v.  Townend,  14  Q.  B.  Div.  103; 
Munster  t.  Ck)x,  10  App.  Cas.  680. 

IT  Buchoz  V.  Grandjean,  1  Mich.  367;  Buchanan  v.  Curry,  19  Johns.  (N.  Y.) 
137;  Harper  v.  Fox,  7  Watts  &  S.  (Pa.)  143.  But  contra  as  to  a  parol  submis- 
■ion.     Hallack  v.  March,  25  111.  48;    Gay  t.  Waltman,  89  Pa,  St.  453. 

18  Hall  V.  Lanuing,  91  U.  S.  160;  Sloo  v.  Bank.  2  111.  428;  Soper  v.  Fry,  37 
Mich,  236;  Squier  v.  Squier,  1  Lack.  Leg.  N.  (Pa.)  193;  Harper  v.  Fox,  7  Watts 
&  S.  (Pa.)  142;  Crane  t.  French,  1  Wend.  (N.  Y.)  311;  Remington  v.  Cummings, 
5  Wis.  138.  But  see,  as  to  a  creditor's  right  to  object,  McCormick  Harvesting 
Mach.  Co.  ▼.  Coe,  53  111.  App.  488. 

19  Welles  V.  March,  30  N.  Y.  344;  Brooks  t.  Sullivan,  32  Wis.  444;  Fox  v. 
Curtis,  176  Pa.  St.  52,  34  Atl.  952;    Crittenden  t.  Hill  (Minn.)  63  N.  W.  1030; 


218  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch,   6 


nor  bv  his  act  purposing  to  extend  the  firm's  business  scope;'"  nor 
by  a  guaranty.'^  He  cannot  make  a  lease  of  realty  for  the  finn,'' 
although  he  can  give  a  valid  notice  to  quit."  He  cannot  mortgage 
the  firm's  real  estate,  although  he  can  pledge  the  firm's  chattels,'* 
and  that  even  for  antecedent  debts,  and  can  redeem  the  pledge." 
He  cannot  discharge  his  private  debt  by  agreeing  that  it  shall  be 
set  off  against  one  due  the  firm." 
Acts    Wlth!n  a  Partm'r's  Implied  Powers. 

A  partner  binds  his  co-partners  by  an  account  rendered ;  *^  by  the 
appointment  of  an  agent  or  servant;"   by  vailing  a  contract  pre- 

Steln  Y.  La  Dow,  13  Minn.  412  (Gil.  381);  Bowen  v.  Clark,  1  Biss.  128,  Fed. 
Cas.  No.  1,721;  Wooldriilt'e  v.  Irving,  23  Fed.  G7ti.  But  see  Williams  ▼.  Frost, 
27  Minn.  255,  6  N.  W.  71)3,  where  an  assignment  by  one  partner  during  the  ab- 
sence of  bis  co-partner  troni  tiu>  country  was  held  good.  And  cf.  Voshmik  v. 
Urquhart,  91  Wis.  513,  65  N.  W.  60;  Hennessy  v.  Bank.  6  Watts  &  S.  (Pa.)  300. 
That  a  managing  partner  may  make  a  valid  assigmnent  for  creditors  without  the 
consent  of  a  nonresident  co-partner,  see  H.  B.  Clalilin  Co.  v.  Evani  (Ohio  Sup.t 
45  N.  E.  3. 

20  Lindl.  Partn.  137. 

21  Duncan  v.  liowndes,  3  Cnmp.  478. 

22  One  partner  has.  acconling  to  the  American  cases,  Implied  power  to  lease 
property  to  be  occupied  by  the  firm  in  the  usual  course  of  its  business.  Seaman 
V.  Ascherman,  57  Wis.  547,  15  N.  W.  7S8;  I'enn  v.  Kearny,  21  La.  Ann.  21; 
Smith  v.  Cisson,  1  Colo.  20;  Stillman  v.  Harvey,  47  Conn.  26.  But  see  1  Llndl. 
Partn.  139,  citing  Sharp  v.  Milligan,  22  Bcav.  606. 

•i3  Doe  V.  Hulme.  'J  Man.  &  It.  AXV.    Doe  v.  Sunimersett,  1   Harn.  &  Adol.  135. 

24  Patch  V.  Wheatland,  8  Allen  (Mass.)  102;  Nelson  v.  Wheelock,  46  111.  24; 
Galway  v,  Fullerton,  17  N.  J.  Eq.  389. 

2  6  Harper  v.  Goodsell,  L.  R.  5  Q.  B.  422. 

26  Lindl.  Partn.  136.  But  see  Grover  v.  Smith  (Mass.)  42  N.  E.  555.  One 
partner  cannot,  as  against  the  partnership,  convey  firm  property  in  payment  of  an 
individual  debt.  Hubbard  v.  Moore.  67  Vt  532.  32  Atl.  465;  Claflin  v.  Ambrose 
(Fla.)  19  South.  628. 

2T  Burgan  v.  Lyell,  2  Mich.  102;  Cady  v.  Kyle.  47  Mo.  346;  Gulick  v.  Gulick. 
14  N.  J.  Law,  578;  Fergusson  v.  Fyffe,  8  Clark  &  F.  121.  Where  one  firm  suc- 
ceeds another,  a  statement  of  indebtedness  of  each  of  the  firms,  rendered  to  third 
persons  during  the  existence  of  the  new  firm,  is  as  to  eacli  firm  binding  on  one 
who,  as  a  partner,  is  individually  liable  for  the  debts  of  both  firms,  when  such  state- 
ment is  made  by  one  acting  as  his  managing  agent  in  both  firms  during  their  ex- 
istence.     Waite  v.  High  (Iowa)  65  N.  W.  397. 

28  Durgin  v.  Somers,  117  Mass.  55;  Mead  v.  Shepard.  54  Barb.  (N.  Y.)  474; 
Burgan  t.  Lyell,  2  Mich.  102;    Harvey  v.  McAdams,  32  Mich.  472;    Sweeney  v. 


§  94) 


PARTICULAR    POWERS.  219 


viously  made  by  them  an;=™  by  assenting  to  a  deed  of  a  debtor 
for  the  benefit  of  his  creditors;^"  by  assenting  to  a  transfer  of  a 
debt;  31  by  a  penalty;"  by  a  purchase;"  by  a  release;'*  by  his 
representations;"  by  accepting  security  for  a  debt;"  by  a  ship 
charter."  A  partner  can  accept  payment  for  firm  debts,"  and  re- 
ceipt for  same;"  and  this,  too,  although  a  dissolution  may  have 
taken  place,  and  some  third  person  have  been  appointed  for  the  pur- 
pose. "^  Such  an  act  would  not,  however,  be  effective,  if  the  debt 
had,  to  the  knowledge  of  the  debtor,  been  assigned  previously  to  an 
individual  partner.*^  He  can  receive  a  bill  in  payment  of  a  firm 
debt,*"  unless  made  in  his  own  name,  in  which  case,  unless  he  had 
authority  from  the  firm  to  accept  it  so  made,  or  the  bill  is  actually 

Neely,  53  Mich.  421.  19  N.  W.  127;  Beckham  v.  Drake.  9  Mees.  &  W.  79;  Bur- 
leigh V.  White,  70  Me.  130;    Barcroft  v.  Haworth.  29  Iowa.  4152. 

2»  Hillock  T.  Insurance  Co..  54  Mich.  532.  20  N.  W.  571;  Leiden  t.  Lawrence, 
2  New  KeportB.  2S3.  But  see  Detroit  v.  Robinson.  42  Mich.  198.  3  N.  W.  845- 
Horn  V.  Bank,  32  Kan.  518.  4  Pac.  1022. 

30  Dudgeon  V.  OCuuuell.  12  Ir.  Kq.  .'.GG;  Morans  v.  Armstrong.  Arms  M  & 
O.  25. 

«i  Beale  y.  Caddick.  2  Hurl.  &  N.  326;    Backhouse  t.  Charlton.  8  Ch.  Div.  444. 

«2  Beckham  v.  Drake,  9  Mees.  &  W.  79. 

»3Venable  ▼.  Levick.  2  Head  (Tenn.)  351;  Dickson  v.  Alexander,  7  Ired.  (N. 
C.)  4;  Alabama  Fertilizer  Co.  v.  Reynolds.  79  Ala.  497.  But  a  partucr  has  power 
to  purchase  only  within  the  scope  of  the  business.  Irwin  v.  Williar,  110  U  S 
4;J9,  4  Sup.  Ct.  IGO. 

««  Bruen  v.  Marquand,  17  Johns.  (N.  Y.)  58;  Allen  v.  Cheever,  (Jl  N.  H.  32; 
U.  S.  V.  Astley,  3  Wash.  C.  C.  508,  511,  Fed.  Cas.  No.  14,472. 

•8  Rapp  V.  Latham,  2  Bam.  &  Aid.  795;    Wickham  v.  Wickham,  2  Kay  &  J.  478. 

»«  Tomlin  v.  Lawrence,  3  Moore  &  P.  555. 

»T  Thomas  t.  Clarke,  2  Starkie,  451;  Ex  parte  Howden,  2  Montague,  D  &  D 
574. 

88  Anon..  12  Mod.  446;  Salmon  v.  Davis,  4  Bin.  (Pa.)  375;  Vanderburgh  v. 
Bassett,  4  Minn.  242  (Gil.  171).  And  to  rec-eive  a  tender  of  payment  Wyckoff 
T.  Anthony,  9  Daly  (N.  Y.)  417;    Douglas  v.  Patrick,  3  Term  R.  683. 

88  Gordon  v.  Freeman,  11  III.  14;  Steele  v.  Bank,  60  111.  23;  Henderson  v. 
Wild,  2  Camp.  561. 

<»  Tyng  V.  Thayer,  8  Allen  (Mass.)  391;  Major  t.  Hawkes.  12  III.  298;  Robbins 
▼.  Fuller,  24  N.  Y.  570;    Gillilan  v.  Insurance  Co.,  41  N.  Y.  376. 

*i  Hilton  V.  Vanderbilt,  82  N.  Y.  591:    Bank  of  Montreal  v.  Page,  98  111.  109. 

*'  Heartt  r.  Walsh,  75  111.  200;  TomUn  t.  Lawrence,  3  Moore  &  P.  555.  But 
■ee  Columbia  Nat.  Bauk  v.  Rice  (Neb.)  67  N.  W.  165.  As  to  a  partner's  power  to 
compromise,  see  Walker  v.  Lumber  Co.  (Ky.)  35  S.  W.  272. 


220  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

paid,  the  firm  still  has  its  right  of  immediate  action  against  the 
debtor.*^  He  can  tender  payment,  and  accept  a  tender,  so  as  to 
bind  the  firm;**  and  so,  also,  the  firm  is  bound  by  his  refusal  in 
either  case,  and  by  his  refusal  to  pay  a  creditor  upon  demand,  after 
tender  once  made  and  rejected.*'  He  may  have  firm  property  in- 
sured,*' and  his  receipt  of  notice  by  the  insurers  of  abandonment 
of  insurance  binds  the  firm.*^  He  can  bind  his  firm  generally  by 
an  admission,*'  and  this,  too,  when  he  cannot  testify  so  as  to  chnrge 
his  co-partner;  for  instance,  when  it  is  sought  to  have  him  disclose 
what  person  or  persons  compose,  with  him,  the  partnership,  in  con- 
troversies when  such  a  disclosure  will  avail  the  opposing  parties 
to  the  action.  The  admission  is  effective  only  after  it  has  been  sat- 
isfactorily shown  by  other  evidence  that  the  parties  charged  are 
partners.**  By  statute.  In  some  of  the  states,  his  admission  cannot 
be  received  in  respect  of  transactions  and  communications  by  him 

*8  Hogarth  t.  Wherley,  L.  R.  10  C.  P.  630. 

«*  WyckofF  V.  Anthony,  9  Daly  (N.  Y.)  417;    Douglas  v.  Patrick,  3  Term  R.  683. 

♦  B  Peirse  v.  Bowles,  1  Starkie,  323. 

«e  Graves  ▼.  Insurance  Co.,  2  Cranch,  43»;  Osgood  r.  Glover,  7  Daly  (N.  Y.) 
367;  Clement  v,  Assiuiatiou,  141  Mass.  2t»8.  5  N.  E.  847;  Iliilock  v.  Insurance 
Co.,  54  Mich.  531.  20  N.  E.  571;  Peoria  Marine  &  Fire  Ins.  Co.  t.  Uall,  12  Mich. 
202. 

*T  Hunt  V.  Koyal  Exchange  Assurance,  6  Maule  &  S.  47.  In  an  action  against 
co-partners,  the  admissions  of  one  jmrtner  as  to  the  scope  of  the  partnership  busi- 
ness, not  made  at  the  time  the  contract  sued  upon  was  executed,  are  not  admis- 
sible against  the  other  partner.     Taft  t.  Church,  1G2  Mass.  527,  39  N.  E.  283. 

*8  Wood  V.  Braddick,  1  Taunt.  104;  Kaskaskia  Bridge  Co.  t.  Shannon,  6  111. 
15;  Kurd  v.  HiifiScrty,  24  111.  171;  Collett  v.  Smith.  143  Mass.  473,  10  N.  E.  173; 
Smith  V.  Collins,  115  Mass.  388;  McCoy  t.  Lightner.  2  Watts,  347;  Western 
Assur.  Co.  v.  Towle,  65  Wis.  247,  26  N.  W.  104;  Wiley  v.  Griswold,  41  Iowa, 
375;  First  NaL  Bank  v.  Carpenter,  34  Iowa,  433;  Munson  v.  Wickwire,  21 
Conn.  513.  As  to  admissions  waiving  the  statute  of  Umitations  after  dissolution 
of  the  linn,  see  Sage  v.  Ensign,  2  Alien  (Mass.)  245;  Kallenbach  t.  Dickinson, 
100  111.  427. 

*9  Oppenheimer  v.  Clemmons,  18  Fed.  886;  Hahn  v.  Insurance  Co.,  50  111.  456; 
Wolle  V.  Brown,  4  Whart.  (Pa.)  365;  Odiorne  v.  Maxcy,  15  Mass.  39;  Union 
Nat.  Bank  v.  UndorhUl,  102  N.  Y.  336,  7  N.  E.  293;  Wiley  v.  Griswold,  41  Iowa, 
375;  Boor  t.  Lowrey,  103  Ind.  468,  3  N.  E.  151;  Fickett  t.  Swift,  41  Me.  65. 
In  an  action  on  a  note  made  by  one  partner  in  the  firm  name,  his  confessions  are 
not  admissible  to  prove  the  note  a  partnership  transaction,  Tuttle  t.  Cooper,  B 
Pick.  (Mas*.)  414. 


§    y4j  PARTICULAR    POWERS.  221 

personally  had  with  a  deceased  partner,  in  an  action  where  the  rep- 
resentatives of  such  deceased  partner  are  the  opposing  parties  to 
him  in  the  action,  or  where  he  is  interested  in  the  issue  of  an  ac- 
tion li.v  or  against  such  parties.  A  partner  may  transfer  firm  prop- 
erty in  payment  of  firm  debts/** 

Same — Powers  of  Partner'  in  Trading  Partnerships. 

In  trading  partnerships,  as  we  have  seen,  a  partner  has  more  ex- 
tended powers,  inasmuch  as  there  he  may  borrow  money  for  the 
firm,  and  bind  the  firm  by  making  and  giving  linn  paper,  and  ac* 
cepting  and  indorsing  other  paper  in  the  firm  name."^  This  power 
of  the  partner  does  not  cover  the  borrowing  of  money  whereby  to 
increase  the  capital  of  the  firm,  for  the  capital  is  essentially  the 
aggregate  of  the  contributions  of  all  the  partners.*'  Such  a  trans- 
action assumes,  then,  the  nature  of  that  of  an  individual  partner 
borrowing  to  provide,  as  it  were,  money  for  his  own  contribution; 
he  only,  of  course,  being  bound."'  His  power  to  borrow  money  so 
as  to  bind  the  firm  includes,  of  course,  the  case  of  his  obtaining 
money  from  the  firm's  bank  by  an  overdraft;'*  but  it  does  not  in- 
clude the  cases  of  his  accepting  a  bill  in  blank,'"  nor  his  opening  a 
bank  account  in  his  own  name."  If  a  partner  borrows  money  to 
an  amount  beyond  all  reason,  considering  the  business  of  the  firm, 
the  loan  is  made  at  the  lender's  peril;  for  he  should  have  looked 
into  the  firm's  business  somewhat,  and  considered  the  extent  of  it. 

BO  Van  Brunt  v.  Applegate.  44  N.  Y.  544.  Cf.  Locke  ▼.  Lewis,  VJA  Mass.  1, 
In  which  it  was  held  that  a  transfer  of  firm  property  in  payment  of  a  private  debt 
would  not  be  avoided  against  a  transferee  who  took  the  property  without  knowledge 
that  it  was  firm  property. 

Bi  Cameron  v.  Blackmun,  39  Mich.  108;  Lamb  v.  Durant,  12  Mass.  56;  Me- 
Conpghy  t.  Kirk,  (>8  Pa.  St.  200;  Bulkley  v.  Dayton.  14  Johns.  (N.  Y.)  387; 
Graser  ▼.  Stellwagen,  25  N.  Y.  316;  Freeman  v.  Carpenter,  17  Wis.  126;  Na- 
tional Bank  of  Commerce  t.  Meader,  40  Minn.  325,  41  N.  W.  1043. 

B»  Fisher  t.  Tayler,  2  Hare,  218. 

»»  Greenslade  v.  Dower,  7  Bam.  &  C.  635. 

04  See  Blackburn  Bldg.  Soc.  v.  Cunliffe.  22  Ch.  Dir.  61,  0  A«>.  Gas.  857;  Wa- 
terlow  V.  Sharp,  L.  R.  8  Eq.  501. 

»B  Hogarth  v.  Latham,  3  Q.  B.  Div.  643. 

•«  Alliance  Bank  t.  Kearsley,  L.  R.  6  C.  P.  433. 


222  RIGHTS    AND    LIABILITIbIS    AS    TO    THIRD    PERSONS.  (Ch.  6 

95.  SEALED  INSTRUMENTS— A  partner  has  no  implied 
power  to  bind  his  copartners  by  the  execution  of 
sealed  instruments,  except  releases.  Authority  to 
do  so  may  be  given  by  parol. 

There  is,  notubly,  one  sort  of  liability  that  the  firm  cannot  be 
exposed  to  by  the  act  of  one  of  the  partners  under  merely  implied 
authority;  that  is,  a  contract  required  to  be  under  seal.*^  All  the 
partners  must  join  in  such  a  contract  to  make  it  binding  on  the 
firm."'  A  single  partner  may  assign  a  mortgage  in  payment  of  a 
firm  debt,  or  release  a  mortgage  under  seal,  and  so  bind  his  part- 
ners;"" but  in  such  cases  it  has  been  held  that,  the  seal  being  not 
essential  to  the  validity  of  the  transaction,  the  rule  does  not  apply. 
The  partner  must  have  express  authority  from  his  co-partners,  in 
order  to  bind  them,  in  all  oases  where  a  sealed  instrument  is  nec- 

»T  Aftor  jfiving  the  rennon  usually  nasiRnpd  for  this  rule,  namely,  a  power  to 
execute  8ealo<l  instruments  "would  enable  him  to  convey  the  real  estate  of  the 
firm,  or  create  liens  u|)on  it,"  etc.,  Mr.  Bates  aays  (1  Bates,  Portn.  8  413,  note): 
"The  doctrine  is  often  resorted  to  In  such  cases  as  the  foundation  of  the  court's 
opinion,  in  place  of  searching  for  the  truer  and  worthier  reason  that  the  act  is 
intrinsically  t>eyon»l  the  scope  of  the  partnership  relation,  whether  sealed  or  un- 
sealed. And,  if  the  limitation  on  the  [>ower  to  do  these  acta  is  not  based  on  a 
better  reason,  the  curious  result  will  follow  that  the  abolition  in  fourteen  of  our 
states  of  all  ilifTcrenco  between  sealed  and  unsealed  instruments  has  anavoidably 
enlar^eil  the  implied  powers  of  partners  already  <niite  larKe  enou;;h." 

88  Van  Deusen  v.  Blum,  18  Pick.  (Mass.)  229;  Clement  v.  Brush,  3  Johns.  Cas. 
(N.  Y.)  181;  People  v.  Judges  of  Court  of  Common  Pleas  of  Dutchess  Co.,  r» 
Cow.  (N.  Y.)  34;  Mackay  v.  Bloodgood,  9  Johns.  (N.  Y.)  285;  McBride  v.  Hagan. 
1  Wend.  (N.  Y.)  326;  McDonald  v.  i:j,'i;lestou.  20  Vt  154;  McKmsht  v.  Wil- 
kius,  1  .Mo.  oUS;  Gerard  v.  Basse,  1  Dall.  Ill);  (iibson  v.  Warden,  14  Wall.  244; 
U.  S.  v.  Astley,  3  Wash.  C.  C.  508,  Fed.  Cas.  No.  14,472.  For  certain  exceptions 
to  this  rule,  which  have  been  permitted  in  bankruptcy  proceedings,  see  Halaey  v. 
Fairbanks,  4  Masou,  200,  Fed.  Cas.  No.  r^.'Jt'A;  Dudgeon  v.  U'Connell,  12  Ir.  Eq. 
566;  In  re  Sauls,  5  Fed.  715;  In  re  Barrett,  2  Hughes,  444,  P'ed.  Cas.  No.  1.043; 
Ex  parte  Hodgkinson,  19  Ves.  291.  The  authority  of  one  member  of  a  partner- 
ship to  execute  a  sealed  instrument  of  lease  in  the  name  of  the  firm  will  be  pre- 
sumed where  his  partner  was  instrumental  in  procuring  the  lease.  Bodey  v. 
Cooper,  82  Md.  025.  34  Atl.  302. 

6»  Brueu  v.  Marquand,  17  Johns.  (N.  Y.)  58;  Smith  v.  Stone.  4  Gill  &  J.  iMd.) 
310;  U.  S.  V.  Astley,  3  Wash.  C.  C.  508,  Fed.  Cas.  No.  14,472;  Halsey  v.  Fair- 
banks, 4  Mason,  200,  Fed.  Cas.  No.  5,904. 


§    95)  SEALED   INSTRUMENTS.  223 

essaiT  to  be  executed.'**  But  its  execution  by  him  in  the  presence 
of  his  co-partners,  they  being  cognizant  of  the  transaction,  and  offer- 
ing no  objection,  would  make  it  binding  upon  them  without  any 
more  express  authority  being  given."^  It  was  formerly  the  dispo- 
sition of  the  courts  to  hold  that,  if  any  one  of  the  partners  was  not 
so  present,  and  thus  assenting,  it  would  require  a  formal  instrument 
under  his  hand  and  seal  to  clothe  the  partner  ofliciating  in  the  trans- 
action with  the  rt^quisite  authority  to  bind  such  absentee;  "  but  the 
courts  are  less  strict  in  their  requirements  generally  now  than  of  old 
in  this  respect."  "^Tiere  one  partner  has  executed  a  sealed  instru- 
ment for  the  firm,  the  other  partners  may  be  bound  by  a  subsequent 
ratification  of  his  unauthorized  act."*  The  liability  does  not  depend 
on  there  being,  on  the  part  of  the  partners  acted  for  by  the  co-part- 
ner executing  the  instrument,  some  authority  given  previously  to  the 
actual  execution;  for  they,  by  any  subsequent  acts  by  way  of  ratifica- 
tion, will  assume  tlie  liability.'*  One  partner  may  acknowledge  a 
deed  of  the  firm.'*  The  partner  attempting  to  execute  a  specialty 
for  the  finn   will  be  individually  liabla*'     A  general  partnership 

•0  Snyder  v.  Mny,  19  Pa.  St.  23.") :  Fichthorn  v.  Boyer,  5  Watts  (Pa.)  15'J; 
Mackay  v.  Bloodgood,  9  Johns.  (N.  Y.)  285;  Hart  t.  Withers,  1  Pen.  &  W.  (Pa.) 
285;  Cummins  v.  Cassily,  5  B.  Muu.  (Ky.)  74;  Turbeville  v.  Ryan,  1  Humph. 
(Tenn.)  113. 

•  1  Fichthorn  t.  Boyer,  5  Wutta  ((Ja.)  159;  Ball  v.  DunsterviUe,  4  Term  K.  313; 
Bum  V.  Burn,  3  Ves.  578. 

•  2  Bontzen  t.  Zierlein,  4  Mo.  417;  Cummins  v.  Cassily,  5  B.  Mon.  (Ky.)  74: 
Harrison  v.  Jackson,  7  Terra  K.  2U7. 

«8  Smith  v.  Kerr,  8  N.  Y.  144;  Cram  v.  Seton,  1  Hall  (N.  Y.)  2U2;  Smcrtz  v. 
Shreevc,  G2  Pa.  St.  457;  Wilcox  v.  Dodge,  12  111.  App.  517;  Ruijsell  t.  Annable, 
109  Mass.  72;    Cady  v.  Shepherd.  11  Pick.  (Muss.)  400. 

««  Smith  T.  Kerr,  3  N.  Y.  144;  Wilcox  v.  Dodge,  12  111.  App.  517;  Swan  v. 
Stedmun,  4  Mete.  (Mass.)  548. 

•  5  Sweetzer  v.  Mead,  5  Mich.  107;  Gwinn  t.  Booker,  24  Mo.  290;  Price  t. 
Alexander,  2  G.  Greene  (loun)  427;    Pike  v.  Bacon,  21  Me.  28<J. 

««  Lowenstein  ▼.  Flaurand,  82  N.  Y.  494;  Baldwin  v.  Tyiies,  19  Abb.  Prac. 
(N.  Y.)  32;  Williams  v.  Frost.  27  Minn.  255,  G  N.  W,  793;  Keck  v.  Fisher,  58 
Mo.  532.      But  see  Sloan  t.  Machine  Co.,  70  Mo.  206. 

«T  U.  S.  V.  Astley.  3  Wash.  C.  C.  508,  Fed.  Cas.  No.  14,472;  Van  Douson  v. 
Blum,  18  Pick.  (Mass.)  229;  Tom  t.  Goodrich,  2  Johns.  (N.  Y.)  213;  Skinner 
V.  Dayton,  19  Johns.  (N.  Y.)  513;  Gates  v.  Graham,  12  Wend.  (N.  Y.)  53;  North 
Pennsylvania  Coal  Co.'s  Appeal.  45  Pa.  St.  181;  Hoskinson  v.  Eliot,  62  Pa.  St. 
393;    Anderson  v.  Levan,  1  Watts  &  S.  334;    WiUis  v.  Hill,  2  Dev.  &  B.  (N.  C.) 


224  RIGHTS    AND    LIABILITIES   AS    TO    THIRD    PERSONS.  (Cll.   6 

agreement,  though  under  seal,  does  not  authorize  the  partners  to  exe 
cute  deeds  for  each  other." 

Release. 

An  exception  to  the  rule  that  a  partner  has  no  implied  power 
to  execute  sealed  instruments  exists  in  the  case  of  technical  re^ 
leases.  This  is  owing  to  the  common-law  rule  that  a  release  by  any 
one  of  the  holders  of  a  joint  claim  discharges  the  claim  of  all." 
A  covenant  by  one  partner  not  to  sue  for  a  partnership  debt  does 
not  amount  to  a  release  of  that  debt  by  the  finii.^"  However,  if  it 
can  be  shown  that  one  partner  has,  in  fraud  of  his  co-partners,  and 
in  collusion  with  the  defendant,  executed  a  release  for  the  purpose 
of  preventing  them  from  enforcing  a  just  demand,  the  defendant 
will  not  be  allowed  to  plead  this  release  as  a  defense  to  an  action 
against  him.^* 

06.  BILLS  AND  NOTES— A  member  of  a  trading  partner- 
ship has  implied  power  to  bind  the  firm  on  negoti- 
able instruments.  A  member  of  a  nontrading  part- 
nership has  prima  facie  no  such  po"wer. 

Every  member  of  an  ordinary  trading  p^irtnership  has  implied 
power  to  bind  the  firm  by  drawing,  accepting,  or  indorsing  bills  of 
exchange,  or  by  making  and  indorsing  promissory  notes  in  its  name 
and  for  the  purposes  of  the  lirm.^'     And  if  two  partners,  unknown 

2.31.  But  spe  rinrt  v.  Withers,  I  Pen.  &  W.  (Pa.)  285;  Brown  ▼.  Bostian,  0 
Jones  (N.  C.)  1. 

•  8  Harrison  v.  Jackson,  7  Term  R.  207. 

90  Dwycr  v.  Sutherland,  73  111.  .083;  Wood  v.  Goss,  21  111.  tKH;  Picrson  t. 
riookor,  3  Johns.  (N.  Y.)  68:  Gillilan  t.  Insuniuce  Co.,  41  N.  Y,  376;  Wells  v. 
Evans,  20  Wend.  (N.  Y.)  251;  Smith  v.  Stone,  4  Gill  &  J.  (Md.)  310;  Noonan 
V.  Orton,  31  Wis.  265;  Furuival  v.  Weston,  7  Moore,  356;  Ex  parte  Sinter,  6 
Ves.  146.  But  see  Braylej  v.  GoCf,  40  Iowa,  76;  Gram  t.  Cadwell,  6  Cow.  (N. 
Y.)  489. 

TO  Emerson  t.  Baylies,  19  Pick.  (Mass.)  55;  Walmesley  t.  Cooper,  11  Adol.  & 
E.  216.    Cf.  Richards  v.  Fisher,  2  Allen  (Mass.)  527. 

Ti  Gram  v.  Cadwell,  5  Cow.  (N.  Y.)  489;  Huntington  v.  Potter,  32  Barb.  (N. 
Y.)  300;  Bray  ley  v.  Gofif,  40  Iowa,  76;  Barker  v.  Richardson,  1  Younge  &  J.  362; 
Phillips  V.  Clagett,  11  Mees.  &  W.  84;    Aspinall  v.  Railway  Co.,  11  Hare,  325. 

7  2  Winship  v.  Bank,  5  Pet  520;  Kimbro  v.  Bullitt,  22  How.  256;  Dow  T. 
Phillips,  24  IlL  249;    Johnson  v.  Barry,  95  111.  483;    SilTerman  v.  Phase,  90  IlL 


§    96y  BILLS    AND    XOTES.  225 

to  each  other,  give  two  bills  in  the  name  of  the  firm  in  payment  of 
the  same  demand,  the  firm  will  be  liable  on  both  bills,  if  held  by 
bona  fide  holders  for  value  without  notice  of  the  mistake^'  A  joint 
and  several  promissory  note,  signed  by  one  partner  for  himself  and 
co-partners,  does  not  bind  them  severally;  ''*  but  it  does  bind  them 
and  him  jointly,^'  and  himsrlf  separately/* 

Non  trading  Partner  ah  ips. 

\\'ith  respect  to  partnerships  which  are  not  trading  partnerships, 
the  question,  whether  one  partner  has  any  implied  authority  to 
bind  his  co-partners,  by  putting  the  name  of  the  tirm  to  a  negotia- 
ble instrument,  depends  M\¥on  the  nature  of  the  business  of  the  part- 
nership.^^ In  the  absence  of  evidence  showing  necessity  or  usage, 
the  power  has  been  denied  to  one  of  several  mining  adventurers," 
farmers,^'  attornej-s,'"  physicians,'^  and  partners  operating  a  thresh 

o7;  Brayley  v.  lli'dj^es,  5li  lown.  ij^^j,  3  N.  W.  (oli;  (.nrrier  v.  Gumerou,  31  Mich. 
373;  First  Nat.  Bank  v.  Freeman,  47  Mich.  408,  11  N.  W.  219;  Wilson  v.  Rich- 
ards, 28  Minn  337,  9  N.  W.  ST2;  Fuller  v.  Percival.  12G  Mass.  381;  Bludgett 
r.  Weed,  119  Mass.  215;  \\  "uJ^UtT  v.  Brown,  16  Wend.  (N.  Y.)  U05;  Mechanics 
Bank  v.  Foster,  44  Barb.  (N.  V.)  87;  Tiuknoy  v.  Hall,  1  Salk.  126;  Swan  v. 
Steele.  7  East,  210;  Wintle  t.  Crowtlier,  1  Cromp.  &  J.  316.  That  a  partner  can- 
not bind  the  hrm  by  a  puaranty  for  the  payment  of  a  bill  of  exchange,  see  Duncan 
T.  Lowndes,  3  Camp.  478. 

T»  Davison  v.  Uobertson,  3  Dow,  218. 

T*  Sherman  v,  Christy,  17  Iowa.  322;    Perring  v.  Hone,  2  Car.  &  P.  401. 

T»  Doty  V.  Bates,  11  Johns,  (N.  Y.)  544;  Lord  Calway  v,  Matthiw,  1  Camp. 
403;    Madae  t.  Sutherland,  3  El.  &  Bl.  1. 

'8  Snow  V.  Howard,  3."*  Barb.  (N.  Y.)  05;  Fulton  t.  Williams,  11  Cush.  (Mass.) 
108;    Gillow  v.  Lillie,  1  Biug.  N.  C.  GO.".. 

7T  Smith  v.  Sloan,  37  Wis.  2.St;  Ulery  v.  Ginrich,  57  111.  5.'il ;  Hunt  v.  Chapiu. 
6  LauB.  (N.  Y.)  139;  Deardofs  Adm'r  ▼.  Thacher,  78  Mo.  128;  Levi  v.  Latham, 
15  Neb.  509,  19  N.  W.  400;  IVase  v.  Cole,  53  Conn.  53.  22  Atl.  G81.  Thf  exe- 
cution of  a  not*  for  the  purchase  price  of  a  team  of  horses  is  not  within  the  implied 
powers  of  either  partner  of  a  firm  engaged  in  the  dairy  business.  Schellenbeck 
V.  Studeuaktr,  13  lud.  App.  437,  41  N.  E.  845.  But  in  the  following  cases  notes 
executed  without  express  authority  were  held  binding  on  the  firm:  Voorhees  v. 
Jones,  29  N.  J.  Law,  270  (railroad  contractors);  Van  Brunt  v.  Mather.  48  Iowa, 
603  (a  storage  and  forwarding  firm);    Miller  v.  Hines,  15  Ga.  197  (a  law  firm). 

T8  Brown  v.  Byers,  16  Meea.  &  W,  252;  Dickinson  v.  Valpy,  10  Barn.  &  O.  128. 

T»  Kimbro  v.  Bullitt,  22  How.  256;  Ulery  v.  Ginrich,  57  III.  531;  Hunt  t. 
Chapin.  6  Lans.  (N.  Y.)  139. 

•0  Smith  V.  Sloan,  87  Wis.  285. 

•1  Garland  v.  Jacomb,  L.  R.  8  Exch.  216;  Levy  t.  Pyne,  Car.  &  M.  453;  Har- 
GEO.PART.— 15 


'-^26  BIGHTS    AND    LIABILITIES    AS    TO    TUIBD    PERSONS.  (Ch.   6 

ing  machine.®^  If,  however,  a  member  of  a  nontrading  firm  con- 
curs in  drawing,  or  authorizes  his  partner  to  draw,  a  bill  in  the 
name  of  the  firm,  he  impliedly  authorizes  its  indorsement  in  the 
same  name  for  the  purpose  for  which  it  was  drawn.®' 

A  partner  has  no  authority  to  sign  a  bank  check  postdated,  and 
even  an  express  authority  to  a  partner  to  issue  checks  for  the  firm 
does  not  extend  to  postdated  checks.**  A  bill  drawn  and  accepted 
by  one  partner  after  the  dissolution  of  a  firm,  although  dated  be- 
fore, do(-s  not  bind  the  firm.**  But,  when  one  of  two  p;\rtners  in 
trade  had,  after  an  act  of  bankruptcy,  accepted  a  bill  of  exchange 
in  the  name  of  the  firm,  without  the  privity  of  his  copartner,  it  was 
held  to  be  an  available  security  in  the  hands  of  an  innocent  in 
dorsee.'* 

Bona  Fide  Holder. 

A  firm  is  bound  on  its  paper  to  a  purchaser  for  value  without 
notice  of  the  jKirtner's  abu.se  or  lack  of  autliority.*^  If  one  has 
written  the  firm  name,  having,  to  the  knowledge  of  the  person 
dealt  with,  no  authority  to  do  so.  the  firm  is  not  required  to  pay 
the  obligation  in  the  hands  of  that  person."     Thus,  where  paper  in 

man  v.  Jobosou,  2  El.  &  HI.  61;  Cro.sthwait  t.  Rosb,  1  Humph.  (Tenn.)  23;  Poolej 
V.  Whitmore.  10  Ilcisk.  (Tenn.)  G1!S),  (;37. 

•  a  Horn  v.  City  Bank,  32  Kan.  518.  4  Pac.  1022. 

«3  Kituer  v.  Wbitloc-k.  88  III.  .">i;{:  DiUKijitis  v.  (Jallnpher  4  I'a.  St.  205. 
Garland  v.  Jacomb,  L.  R.  8  Exih.  216;    Lewis  v.  Reilly,  1  Q.  B.  349. 

8<  Foister  v.  >Liokre'tli.  L.  K.  2  Excb.  163. 

8  0  Wrigbt  V.  Pulbam,  2  Chit.  121;  Miirlett  v.  Jackman,  3  Allen  (Mass.)  287. 
One  partner,  after  a  dissolution  of  the  partnership,  cannot  indorse  notes  or  bills 
given  before  to  the  firm,  so  as  to  bind  his  co-pnrtner,  though  be  is  autiiorized  to 
settle  up  the  firm  business.     Sanford  v.  Mickles,  4  Johns.  (.N.  Y.)  '1'1\. 

86  Lacy  V.  Woolcott,  2  Dowl.  iV:  R.  4o8. 

8T  Fuller  V.  Perdval,  126  Mass.  381;  Atlas  Nat.  Bank  v.  Savery,  127  Mass.  75; 
Munroe  v.  Cooper,  6  Pick.  (Mass.)  412;  Atlantic  State  Bank  v.  Savery,  82  N.  Y. 
'J91;  First  Nat.  Bank  v.  MorKiui.  73  N.  Y.  55>3;  Stall  v.  Bank,  18  Wi-nd.  (N. 
Y.)  466;  Gale  v.  Miller,  44  Barb.  (N.  Y.)  420;  Moorehead  t.  Gilmore.  77  Pa.  St. 
118;  Ihmsen  v.  Neglcy.  25  Pa.  St.  297;  Miller  v.  Bank,  48  Pa.  St.  514;  Murphy 
V.  Camden,  18  Mo.  122.  One  who  loans  money  to  a  member  of  a  mercantile  firm, 
and  receives  from  him  a  note  executed  in  the  name  of  the  firm,  has  a  right  to  pre- 
sume that  the  note  is  made  in  the  course  of  the  partnership  business.  (Sherwood 
▼.  Snow,  46  Iowa,  481,  followed.)    Piatt  v.  Koehler,  91  Iowa,  592,  60  N.  W.  178. 

•  «  Powell  T.  Waters,  8  Cow.   (N.   Y.)   688;    Boyd   v.  Plumb,   7   Wend.   (N.   Y.) 


§    i-'u)  BILLS    AND    NOTES.  227 

the  firm  uame  is  given  to  satisfy  a  separate  debt  of  the  partner 
executing  it,  the  firm  is  not  bound.*®  There  is  more  than  one  way 
in  which  commercial  paper  binding  on  the  firm,  or  apparently  so, 
may  be  drawn;  and,  because  the  whole  transaction  is  not  always 
to  be  gathered  from  the  form  of  the  paper,  it  may  be  said,  gen- 
erally, that  the  escape  of  the  firm  from  liability  depends  upon  the 
notice  the  holder  has.  Thus,  the  indorser  of  a  note  made  by  a 
partner  individually  cannot  recover  its  amount  from  the  firm,  even 
though  it  be  found,  subsequently,  that  the  latter  had  the  benefit  of 
it;  for  such  iudoi-ser  had  notice  of  the  private  transaction.'*'^  And, 
for  the  same  reason,  a  note  made  by  a  member  of  two  firms  in  the 
name  of  one  of  them,  in  favor  of  his  co-paitner  in  the  other  firm, 
for  an  individual  debt,  would  bind  only  the  individual.'^  The  firm 
is  not  bound  if  the  act  of  the  agent  in  putting  the  firm  name  on 
the  paper  has,  knowingly  to  the  other  party,  been  done  in  fmud 
of  his  co-partners.'*  It  might  happen  that  the  act  has  been  done 
literally  in  the  firm  name,  where  the  firm  is  not  bound  necessarily, 
— where  the  firm  name  is  that  of  an  individual,  for  instance,  and 
this  individual  has  executed  and  delivered  a  note.  It  would  not 
appear  here  as  a  certainty  whether  the  note  was  that  of  the  in- 
dividual or  the  firm.  Tlie  burden  of  proof  would  be  on  the  holder, 
in  a  case  of  this  sort,  to  show  that  the  note  was  given  on  the  part- 
nership account,  iH'cause  the  presumption  would  be  that  the  maker 
had  acted  on  his  individual  behalf  in  the  transaction. ••     In  Penn 

309;  Foot  t.  Sabin,  19  Johns.  (N.  Y.)  154;  Smyth  v.  Strader,  4  How.  (U.  S.)  404: 
lu  re  Irving,  IT  N.  H.  K.  '-1,  Case  No.  7,074;  West  St.  Louis  Sav.  Bank  v. 
Shawnee  County  Bank.  95  U.  S.  557;  Moynahau  v.  Hanaford,  42  Mich.  329,  3 
.\.  W.  944;  Bowman  v.  Bunk,  3  Grant,  Gas.  (Pa.)  ;i3.  But  see,  for  facts  held  not 
to  show  knowledge  of  lack  of  authority,  Wait  ▼.  Thayer,  118  Mass.  473;  Atlas 
Nat.  Bank  v.  Savcry,  1127  Mass.  75;    Ex  parte  Bushell,  3  Montague,  D.  &  D.  (n5. 

8»  Funk  V.  Babbitt,  55  111.  App.  124;  Levcrson  v.  Lane,  13  C.  B.  (N.  S.)  278. 
And  see  Hall  v.  West,  1  Lindl.  Partn.  (5th  Eng.  Ed.)  1S3.  A  partner  cannot  is- 
sue firm  paper  for  his  own  accommodation.  National  Security  Bank  v.  McDonald, 
127  Mass.  82;  Wilson  v.  Williams,  14  Wend.  (N.  Y.)  140;  Chenowith  ▼,  Cham- 
berlin,  6  B.  Mon.  (Ky.)  GO;    Htffron  v.  Hanaford,  40  Mich.  305. 

»o  Peterson  v.  Roach,  32  Ohio  St  374. 

»i  McConnell  v.  Wilkins,  13  Ont  App.  (Can.)  438. 

•2  New  York  Firemen's  Ins.  Co.  v.  Bennett,  5  Conn.  574;  Cotton  t.  Evan.s,  1 
Dev.  &  B.  Eq.  (N.  C.i  284. 

••  York.-hire   Banking  Co.   v.  Beatson,  5   C.   P.   Div.   109;     U.   S.   Bank   v.   Bin- 


228  RIGHTS    A-VD    LIABILITILS    AS    TO    THIRD    PERSONS.  (Cb.   6 

sylvania,  however,  the  burden  of  proof  in  such  a  case  would  be 
on  the  firm,  the  presumption  being  that  the  firm,  rather  than  the 
individual,  was  the  party  intended  as  obligor.**  As  intimated  above, 
the  authorities  are  by  no  means  unanimous  on  the  question  wheth- 
er the  firm  can  be  held  upon  paper  signed  in  blank  in  its  name  by 
a  partner."* 

97.  BORROWING — A  member  of  a  trading  partnership 
has  implied  power  to  borrow  money  and  to  pledge 
the  firm's  personal  property  as  security.  A  mem- 
ber of  a  nontrading  partnership  has  no  such  power. 

The  sudden  exigencies  of  commerce  reuder  it  absolutely  neces- 
sary that  power  to  borrow  money  should  exist  in  the  members  of 
a  trading  partnership,  and  accordingly  this  power  is  clearly  recog- 
nized.*® It  has  bc-eu  already  seen  that  one  partner  can  bind  the 
firm  by  a  bill  or  note,  upon  which  money  may  be  obtained,  by  the 
everyday  process  of  discounting;  and  the  power  of  one  partner  to 
pledge  partnership  good.s  for  advances  is  equally  well  established.*^ 
At  the  siime  time,  the  power  of  borrowing  money,  like  every  other 

ney,  5  Mason.  176,  Fed.  Cas.  No.  16,701;  Manufacturcre"  Bank  v.  Mathews,  18 
Barb.  (N.  Y.)  0«)S;  Funk  v.  Babbitt,  55  III.  App.  124.  But  it  is  otherwise  where 
the  firm  name  imiwrts  a  partnership.  Carrier  v.  Cameron,  31  Mich.  373;  Vallett 
v.  Parker,  6  Weud.  (N.  Y.)  615;  Whitaker  ▼.  Brown,  16  Wend.  (N.  Y.)  505; 
Hogg  V.  Orgill,  34  Pa.  St.  344.  A«  to  the  liability  of  dormant  partners,  see  Bank 
of  Alexandria  v.  Mnndeville.  1  Cninch,  C.  C.  575,  Fed.  Cas.  No.  851;  U.  S.  Bank 
V.  Binney,  5  Mason,  176,  Fed.  Caa.  No.  16,7"J1;  Ontario  Bank  v.  Uennessey,  48 
N.  Y.  545;  Miller  v.  Manice,  6  Hill  (N.  Y.)  114.  Where  a  note  is  given  partly  for 
a  private  debt,  and  partly  for  a  firm  debt,  the  casi-s  are  not  at,'ree.l  as  to  the  effect. 
King  V.  Faber,  22  Pa.  St  21;  Rice  t,  Doane,  IW  Mass.  136,  41  N.  E.  126;  Guild 
V.  Belcher,  119  Mass.  257;  Wilson  t.  Forder,  20  Ohio  St.  89. 
»4  MillHn  v.  Smith,  17  Serg.  &  K.  (Pa.)  165.      But  see  Burrough's  Appeal,  26  Pa. 

St.  204. 

""That  it  can,  see  Chemung  Canal  Bank  t.  Bradner,  44  N.  Y.  680.  Contra, 
Hogarth  v.  Latham,  3  Q.  B.  Div.  043. 

90  Smith  V.  Collins,  115  Mass.  388;  Pahlman  v.  Taylor.  75  111.  629;  Blinu  v. 
Evans,  24  111.  317;  Church  v.  Sparrow,  5  Wend.  (N.  Y.)  223;  Sherwood  v.  Snow, 
46  Iowa,  481;  National  Bank  of  Commerce  ▼.  Meader,  40  Minn.  325,  41  N.  W. 
1043;  Winship  v.  Bank,  5  Pet.  (U.  S.)  529.  See,  also,  Wilkins  v.  Pearce,  6  Denio 
(N.  Y.)  541;    Rothwell  ▼.  Humphreys,  1  Esp.  406. 

•1  See  ante,  p.  224. 


§    ^^)  BORROWING.  229 

implied  power  of  a  partner,  only  exists  where  it  is  necessary  for  the 
transaction  of  the  pai'tnership  business  in  the  ordinary  way.  And 
consequently,  if  money  is  borrowed  by  one  partner  for  the  declared 
purpose  of  increasing  the  partnership  capital,»»  or  of  raising  the 
whole  or  part  of  the  capital  agreed  to  be  subscribed  in  order  to 
start  the  firm;"  or  if  the  business  is  such  as  is  customarily  car 
ried  on  on  ready-money  principles,  e.  g.  mining  on  the  cost-book 
principle;  ^"^  or  without  borrowing,  as  in  the  case  of  solicitors/"^— 
the  firm  will  not  be  bound,  unless  some  actual  authority  or  ratifi- 
cation can  be  proved.  Still  less  will  the  firm  be  bound  where  bor- 
rowing is  prohibited,  and  the  pei-son  advancing  the  money  is  aware 
of  the  prohibition.^"' 

(riving  Security/. 

The  power  to  borrow  includes  the  power  to  give  security.  A 
partner  may  mortgaire  or  pledge  the  personal  property  of  the  firm  to 
secure  loans  made  by  him  for  ;aitecedent  debts,*"*  or  to  secure  fu 

•  8  Fisher  ▼.  Tayler.  2  Hnre.  218. 

•»  Kirby  T.  McDonald.  17  C.  C.  A.  26.  70  Fed.  139;  National  Bank  t.  Criu 
gan,  91  Va.  347,  21  S.  E.  820.  A  loan  on  the  borrower'a  own  credit,  to  enablo 
him  to  contribute  his  share  of  capital  in  a  partnership,  df>es  not  constitute  a  part- 
nership debt.      Bannister  v.  Miller  (N.  J.  Ch.)  32  Atl.  10lJ<;. 

100  Burmester  t.  Norris.  G  Exch.  796;  Hawtayne  t.  Bourne,  7  Mees.  &  W.  595; 
Ricketts  v.  Bennett.  4  C.  B.  68(5. 

101  Smith  V.  Sloan.  37  Wis.  285;  Friend  t.  Duryee,  17  Fla.  111.  So  of  a  firm 
of  physicians.      Crosthwait  v.  Koss.  1  Humph.  (Tenn.)  23. 

102  In  re  Worcester  Com  Exchange  Co.,  3  De  Gex.  M.  &  G.  180;  Blackburn 
Bldg.  Soc.  r.  CunliCfe,  22  Ch.  Div.  61.  Whra  money  is  borrowed  by  a  partner 
as  an  individual,  the  fact  that  it  is  applied  for  the  benefit  of  the  firm  will  not 
make  the  firm  liable.  Gibbs  t.  Batee,  43  N.  T.  192;  National  Bank  v.  Thomas, 
47  N.  Y.  15;  Green  t.  Tanner.  8  Mete.  (Mass.)  411;  Donnally  v.  Ryan.  41  Pa. 
St.  306;  McLinden  v.  Wentworth.  51  Wis.  170,  8  N.  W.  118.  When  money  is 
borrowed  for  the  firm,  and  the  partner  borrowing  It  uses  it  for  private  purposes, 
the  firm  is,  nevertheless,  liable.  Stark  v.  Corey,  45  111.  431;  Real  Estate  Inv. 
Co.  V.  Smith,  162  Pa.  SL  441,  29  AU.  855;  Freeman  v.  Carpenter,  17  Wis.  126; 
Warren  v.  French,  6  Allon  (Mass.)  317;  Hayward  t.  French,  12  Gray  (Mass.) 
4.')3;    Kleinhaus  v.  Generous,  25  Ohio  St.  667. 

10^  Richardson  v.  Lester.  83  111.  5.".;  Nelson  v.  Wheelock,  46  111.  25;  Patch  v. 
Wheatland,  8  Allen  (Mass.)  102;  Milton  v.  Mosher,  7  Mete.  (Mass.)  244;  Keegan 
V.  Cox.  116  Mass.  289;  Dickson  v.  Dryden  (Iowa)  66  N.  W.  148;  Buettner  t. 
Steinbrecber,  91  Iowa,  588,  60  N.  W.  177;    Bank  of  Gunterville  v.  Webb  (Ala.) 


2oO  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   G 

ture  advances;  ^°*  but  the  power  does  not  extend  to  mortgaging  real 
property/*"' 

98.  SIMPLE  CONTRACTS— A  partner  has  implied  power 
to  bind  the  firm  by  contracts  within  the  scope  of 
the  partnership  business. 

The  line  of  trade  or  enterprise  pursued  by  the  firm  is  usually  set 
forth  in  the  articles  of  partnership;  and,  if  parties  dealing  with  a 
partner  have  actual  notice  of  the  scope  of  the  business,  through  these 
articles  or  otherwise,  and  contract  outside  of  such  scope  notwith- 
standing their  having  such  notice,  the  firm  is  not  bound. ^°*  In  the 
absence  of  such  actual  notice  on  the  part  of  the  persons  thus  dealing 
with  a  partner,  the  tlrm  is  held;  otherwise,  in  a  case  where  such 
persons  had  information  of  facts  which  should  have  led  a  reason- 

19  South.  14;  West  Coast  Grocery  Co.  t.  Stinson.  13  Wash.  255,  43  Pac.  35; 
Woodruff  V.  KiiiK.  47  Wis.  2(il.  2  N.  W.  452. 

104  Kc'tg-an  v.  Cox.  lU?  Mass.  281);  McCrcgor  v.  Ellis,  2  Disn.  (Ohio)  286; 
Rogers  v.  Gage,  59  Mo.  App.  107.  But  a  partner  has  no  implied  power  to  give 
security  for  the  debts  of  otliers.  Bank  of  Commerce  v.  Selden,  3  Minn.  160  (Gil. 
99).  It  is  within  the  power  of  one  member  of  a  partnership,  acting  iu  good  faith, 
to  make  a  ch.Tttol  mortj-inj-'o  of  all  the  partnership  property,  to  secure  partnership 
Indebtedness.      Settle  v.  Di-y-CJoods  Co.,  14  C.  C.  A.  144.  (36  Fed.  850. 

106  Napier  v.  Catron,  2  Iluniph.  (Tenn.)  534;  Weeks  v.  Knke  Co.,  58  N.  H.  101. 
But  see  McGahan  v.  Bank,  156  U.  S.  218,  15  Sup.  Ct.  347.  In  Re  Clough,  31 
Ch.  Div.  321,  a  surviving  partner  was  held  to  have  power  to  deposit  a  contract  for 
the  sale  of  land  as  security  for  a  pre-existing  debt. 

106  Aultman  &  Taylor  Co.  v.  Shelton,  90  Iowa,  288,  57  N.  W.  857.  One  member 
of  a  firm  of  real-estate  brokers  may  bind  his  co-partners  by  a  revocation  of  a  con- 
tract previously  entered  into  by  him  with  the  owners  of  lands,  whereby,  for  a  time 
agreed  on,  such  firm  acquiretl  an  exclusive  right  to  sell  such  lands,  llarpor  v.  Mc- 
Kinnis,  53  Ohio  St.  434,  42  N,  E.  251.  One  cannot  claim  profits  under  a  lease  made 
by  a  firm  as  a  partner  therein,  and  at  the  same  time  repudiate  the  lease  because  not 
joined  in  or  assented  to  by  him.  Enterprise  Oil  &  Gas.  Co.  v.  National  lYausit  Co., 
172  Pa.  St.  421,  33  Atl.  G87.  Where  property  of  an  old  firm  passing  to  a  new  firm, 
with  new  members,  is  subject  to  a  mortgage  executed  by  the  old  firm,  an  agree- 
ment authorizing  the  mortgagee,  if  he  purchases  on  foreclosure,  to  apply  the  surplus 
proceeds  to  the  payment  of  a  debt  of  the  old  firm,  not  being  within  the  scope  of  the 
partnership  business  of  the  new  firm,  must  be  agreed  to  by  each  member  of  the  new 
firm  individually.    Kiing  t.  Tunstall  (Ala.)  19  South.  907. 


5    ^'-^)  BUYING    AND    SELLING.  231 

ably  prudent  and  cautious  man  to  inquire.^"^  At  the  same  time, 
it  should  be  remarked  that  these  rules  are  relaxed  somewhat,  accord- 
iri<r  to  anv  usage  or  habit  the  firm  may  have  acquired,  inconsistent 
with  strict  limitations  in  the  partnerehip  agreement,  in  respect  of 
file  line  of  the  firms  business.^"*  In  contracting  with  a  partner- 
ship, persons  in  pK)ssession  of  no  facts  to  guide  them  in  determining 
the  scope  of  the  firm's  business  are  at  liberty  to  consider  the  usages 
of  firms  engaged  in  similar  pursuits  in  the  same  locality.^"* 

99.  BUYING  AND  SELLING— A  partner  has  implied 
power  to  buy  and  sell  property  -within  the  scope 
of  the  firm's  business. 

It  has  long  been  decided  that  every  member  of  an  ordinary  trad- 
ing partnership  has  implied  power  to  purchase  on  the  credit  of  the 
firm  such  goods  as  aie  or  may  be  necessary  for  carrying  on  its  busi- 
ness in  tlie  usual  way.""  Tliis  cannot  be  more  strongly  exemplified 
than  by  the  case  of  Hond  v.  Gibson.^ ^^  There  two  persons  carried 
on  business  as  harness  makers.  One  of  them  bought  on  the  credit 
of  the  firm  a  number  of  bits  to  be  made  up  into  bridles;  but,  instead 

107  Ricp  V.  Jackson.  171  Pa.  St.  89,  32  Atl.  1036;  Winship  y.  Bank,  5  Pet.  51iU, 
National  T.ank  v.  Criii}:an.  91  Va.  347,  21  S.  E.  S'JO.  A  niomber  of  a  firm  cngagorl 
in  the  cattle  commission  business  has  authority  to  enter  into  an  agreement  where- 
by a  bank  is  to  furnish  a  customer  money  to  purchase  cattle  with,  in  consideration 
that  the  firm  accept  drafis  drawn  on  it  to  the  extent  of  the  net  proceeds  of  the  cat- 
tle shipped  to  it.  First  Nut.  Bank  v.  Kowloy  (Iowa)  Gl  N.  VV.  190.  An  agreement 
by  one  member  of  a  law  firm  with  the  purchaser  of  a  note  owned  by  the  member 
Individually  that  the  firm  would  collect  the  note  without  charge,  was  not  binding 
on  the  firm.      Davis  v.  Dodson.  95  Ga.  718,  22  S.  E.  (i45. 

108  ^S•oo.Jward  v.  Winship,  12  Pick.  (Mass.)  430. 

»o»  Seaman  v.  Aschermann,  57  Wis.  .547.  15  N.  W.  788;  Irwin  v.  Williar,  110 
U.  S.  499,  4  Sup.  Ct.  100. 

110  Porter  v.  Curry,  GO  111.  319;  McDonald  v.  Fairbanks,  161  111.  124,  43  N.  E. 
783;  Brachcs  v.  Anderson,  14  Mo.  441;  Mead  v.  Shepard.  54  Barb.  (N.  Y.)  474; 
Dickson  v.  Alexander,  7  Ired.  (N.  C.)  4;  Alabama  Fertilizer  Co.  t.  Reynolds,  79 
Ala.  497;  Cameron  v.  Blackman,  39  Mich,  108;  Stecker  v.  Smith,  46  Mich.  14,  8 
N.  W.  583;  Venable  v.  Levick,  2  Head  (Tenn.)  351;  Griffith  v.  Bufifum,  22  Vt. 
181;  Smith  r.  Smyth,  42  Iowa,  493.  A  partner  may  buy  land  if  necessary  for 
the  firm  business.  Davis  v.  Cook,  14  Nev.  265.  But  see  Clay  t.  Carter,  16 
Wkly.  Notes  Cas.  (Pa,)  385;  Judge  t.  Braswell,  13  Bush.  (Ky.)  67, 

"1  1  Camp.  185. 


232  RIGHTS    AND    LIABILITIES    A3    TO    THIRD    PERSONS.  (Ch.   6 

ot  nsing  the  bits  for  the  partnership  business,  he  pawned  them  for 
his  own  use.  The  seller  of  the  bits  was,  neverthck'ss,  held  entitled 
to  recover  their  price  in  an  action  against  both  partners.  The  firm  is 
liable,  although  the  goods  may  have  been  supplied  to  one  only  of  the 
partners,  and  no  other  pereon  may  have  been  known  to  the  supplier 
an  belonging  to  the  firm.^^'  But,  as  has  been  seen,  the  firm  is  not 
liable  for  goods  ordered  by  and  supplied  to  one  partner,  and  which 
it  was  his  duty  to  contribute  to  the  joint  stock  of  the  firm.*** 

The  pK)wer  of  one  partner  to  bind  the  firm  by  a  purchase  of  goods 
on  its  credit  is  not  confined  to  trading  partnerships.  Thus,  where 
some  printers  and  publishers  agreed  to  share  the  profits  of  a  work, 
and  the  publishers  ordered  paj>er  for  that  i):>rticular  work,  and  be- 
came bankrupt,  the  printers  were  held  liable  for  its  price  to  the 
stationers  who  supplied  it."*  It  is  of  no  consequence  what  the 
partnership  business  may  be,  if  the  goods  supplied  are  necessary  for 
its  tmns;i(<ion  in  the  ordinary  way."* 

A  purchase  by  a  partner,  although  made  with  the  intention  to 
defraud  his  firm,  will  bind  the  latter,  if  the  seller  was  not  privy  to 
the  fraudulent  intention."'  If  goods  are  bought  by  a  partner  ac- 
tually and  ostensibly  as  an  individual,  he  alone  is  liable  to  the 
seller;  and  a  partner,  acting  thus  as  an  individual,  and  not  as  an 
agent,  would  in  such  a  transaction  still  be  solely  liable,  even  should 
the  firm  become  benefited  by  it^*' 

SeHinp. 

Each  member  of  a  partnership  has  implied  power  to  sell  any  part 
of  the  personal  property  of  the  firm,  both  corporeal  and  incorpo- 

112  Bisel  V.  Hobbs,  6  Blackf.  (Ind.)  479;  Bracken  t.  March,  4  Mo.  74;  GardiDer 
T.  Childs,  8  Car.  &  P.  345. 

ii»  Aate,p.22'J;  MorliUer  v.  Bernard,  10  Ileisk.  (Tenu.)  3(31;  Greenslade  v.  Dower, 
7  Barn.  &  C.  635. 

11*  Gardiner  v.  Childs.  8  Car.  &  P.  345. 

116  A  partner  of  a  firm  engaged  in  the  livery  business  is  acting  within  the  scope 
of  the  partnership  business  when  he  procures  horses  for  the  use  of  the  firm.  Chap- 
pie V.  Davis,  10  Ind.  App.  404,  38  N.  E.  355. 

ii«  Bond  V.  Gibson,  1  Camp.  185;  Carver  ▼.  Dows,  40  111.  874;  Clark  ▼.  John- 
son, 90  Pa.  St.  442;  Kenney  t.  Altvater,  77  Pa.  St.  34.  And  see  Johnson  t. 
Barry,  95  111.  483. 

iiT  Emly  V.  Lye,  15  East,  7;  Hecker  t.  Fegely,  6  Watts  &  S.  (Pa.)  139;  Sinkler 
?.  Lambert,  5  Phila.  (Pa.)  36;  Holmes  ▼.  Burton^  9  Vt.  252. 


§    99)  BUYING    AND    SELLING.  283 

real."'  He  may  transfer  negotiable  instruments  belonging  to  tBt 
fiim.*'°  One  partner  selling  firm  property  has  implied  power  to 
bind  the  firm  by  a  warranty  of  the  property  sold.^*^  It  is  often 
■tated  that  a  partner  may  sell  all  the  partnership  property  at  one 
time,  and  thus  terminate  the  partnership.^"*  But  the  tendency 
of  the  modern  cases  is  away  from  this  rule.     The  better  reason  seems 

ii»  Christ  T.  Firestone  (Pa.  Sup.)  11  AtL  395;  Peden  v.  Mail,  118  Ind,  5G0,  20 
N.  E.  446;  ATery  v.  Fisher,  28  Hun  (N.  Y.)  508;  Hudson  v.  McKenzie,  1  E,  D. 
Smith  (N.  Y.)  358:  Simonton  v.  Sibley,  122  U.  S.  220.  7  Sup.  Ct.  1351.  A  partner 
has  power  to  sell  after  dissolution  in  order  to  wind  up  the  business.  Butchart  v. 
E)resser,  4  De  Gei,  M.  &  G.  542.  As  to  the  right  of  a  solvent  partner  to  transfer 
firm  property  after  the  bankruptcy  of  his  co-partner,  see  Fox.  v.  Hanbury,  Cowp. 
445.  A  partner  has  power,  after  dissolution  of  the  Qrm  by  death,  to  sell  partner- 
ship realty  to  pay  debts.  Shanks  t.  Klein,  104  U.  S.  18.  That  a  partner  has  iui- 
ptied  power  before  dissolution  to  sell  the  firm  realty,  see  Thompson  v.  Bowman.  G 
Wall.  31G;  Clark  v.  Allen.  34  Iowa,  IIK).  And  see  Chester  v.  Dickerson,  54  N. 
Y.  1,  holding  that,  tliough  one  partiuT  cannot  convey,  he  may  make  a  binding  con- 
tract of  sale.  Contra,  Kuffner  v.  McCouuel,  17  IIL  212.  A  partner  intrusted  with 
the  selling  of  the  firm's  products  has  the  right  to  employ  brokers  to  assist  him 
In  making  sales.  Mattingly  v.  Moore  (Ky.)  30  S.  W.  870.  A  fair  sale  made"  in 
good  faith  to  an  existing,  bona  fide  creditor  by  one  partner,  without  the  consent  ol 
the  other,  may,  where  the  purchaser  has  notice  of  such  want  of  consent,  be  ques 
tioned  by  the  non-assenting  partner,  but  it  is  good  &m  to  ail  third  persons.  Klemm 
T.  Bishop,  56  111.  App.  613.  One  who  knowingly  receives  partnership  property  witli 
kuowli'dge  that  its  proceeds  are  passing  to  the  imliriihial  use  of  one  partner  is 
charged  with  notice  of  such  partner's  want  of  authority  to  dispose  of  the  property 
for  his  individual  benefiL  Columbia  Nat.  Bank  ▼.  Rice  (Neb.)  67  N.  W.  16'.. 
Whore  a  partner  Bells  firm  goods  under  an  agreement  that  one-fourth  of  the  price 
should  be  applied  on  a  private  debt  owed  by  the  partner  to  the  purchaser,  the  finu 
cannot  recover  such  one-fourth.  Grover  v.  Smith.  Itj.")  Mass.  132,  42  N.  E.  5r>ri 
A  firm  formed  to  buy  and  sell  merchandise  is  bound  by  its  contract  assuming  obli- 
gations of  a  debtor  in  consideration  of  a  sale  of  merchandise  by  him  to  the  firm, 
though  the  transaction  was  conducted  by  one  partner.  National  Bank  of  the  Re- 
public V.  Dickinson  (.\la.)  18  South.  144. 

1  =  0  George  v.  Tate.  102  U.  S.  5G4;  First  NaL  Bank  t.  Freeman,  47  Mich.  408. 
11  N.  W.  219:  Manning  t.  Hays,  6  Md.  5;  Gerli  t.  Manufacturing  Co.  (N.  J. 
Err.  &  App.)  81  Atl.  401. 

121  Sweet  T.  Bradley,  24  Barb.  (N.  Y.)  549: 

122  Lamb  v.  Durant,  12  Mass.  54;  Tapley  v.  Butterfield,  1  Mete.  (Mass.)  515; 
Arnold  V.  Brown,  24  Pick.  (Mass.)  89;  Deckard  v.  Case,  5  Watts  (Pa.)  22.- 
Graser  t.  Stellwagen,  25  N.  Y.  315;    Mabbett  t.  White,  12  N.  Y.  442. 


234  EIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.    6 

to  require  that  the  implied  power  of  a  partner  to  sell  firm  property 
be  restricted  to  "property  which  is  held  for  the  purpose  of  sale."  ^" 

100.  NOTICE — A  partner  has  implied  power  to  receive 
notice  of  matters  touching  the  partnership  business, 
and  to  bind  the  firm  thereby. 

As  a  general  rule,  notice  to  a  principal  is  notice  to  all  his  agents, 
and  notice  to  an  agent  of  matters  connected  with  his  agency  is  no- 
tice to  his  principal.^**  Consequently,  as  a  general  rule,  notice  to 
one  partner  of  any  mutter  relating  to  the  business  of  the  firm  is 
notice  to  all  the  other  ineinbers;  ^^^  and  if  two  firms  have  a  common 
partner,  notice  which  is  imputable  to  one  of  the  tirms  is  imp\itable 
to  the  other  also,  if  it  relates  to  the  business  of  that  other.*'*  In 
conformity  with  tliese  principles,  if  a  firm  claims  the  benefit  of  a 
transaction  entered  into  by  one  of  its  members,  it  cannot  effectually 
set  up  its  own  ignorance  of  what  that  member  knew,  so  as  to  be 
in  a  better  position  than  he  himself  would  have  been  in  had  he  been 
dealing  on  his  own  account  as  a  principal.*"^  \Yhen  it  is  said  that 
notice  to  one  partner  is  notice  to  all,  what  is  meant  is  (1)  that  a  firm 
cannot,  in  its  character  of  principal,  set  up  the  ignorance  of  some 
of  its  members  against    the  knowledge  of  others  of  whose  acts  it 

i28Wallnce  ▼.  Yeager,  4  Thlla.  (Pa.)  251:  Sloan  ▼.  Moore,  37  Pa.  St.  217; 
Bender  t.  Hemstrect,  12  Misc.  Rep.  620.  34  N.  Y.  Snpp.  423;  Kimball  v.  Insurance 
Co.,  8  Bosw.  (N.  Y.)  495;  Hunter  ▼.  Waynick,  (J7  Iowa,  555,  25  N.  W.  776.  A 
partner  has  not  power,  without  his  co-partner's  consent,  to  sell  all  the  partnership 
property,  as  such  transaction  i?  not  within  the  scope  and  object  of  the  partnership, 
or  in  the  course  of  its  business.  Bender  v.  Hemstreet,  12  Misc.  Rep.  620,  34  N.  Y. 
Supp.  423. 

124  Mechem,   Ag.  §  718. 

125  Tucker  v.  Cole.  54  Wis.  53;),  11  N.  W.  703;  Hubbard  t.  Galusha,  23  Wi». 
398;  Haywood  v.  Harmon.  17  111.  477;  Ilolbrook  v.  Wight,  24  Wend.  (N.  Y.) 
169;  Miller  v.  Perrine,  1  Hun  (N.  Y.)  620;  Hubbardston  Lumber  Co.  ▼.  Bates, 
31  Mich.  158:  Howland  v.  Davis,  40  Mich.  545;  McClurkan  ▼.  Byers,  74  Pa. 
St.  405;    Stockdale  v.  Keyes,  79  Pa.  St.  251. 

128  Wfst  Branch  Bank  v.  Fulmer,  3  Pa.  St.  3!>9;  Woodbury  ▼.  Saokrider,  2 
Abb.   Prac.  402. 

12T  Powell  V.  Waters,  8  Cow.  (N.  Y.)  6C9;  Quinn  t.  FuUer,  7  Gush.  (Mass.) 
224;   Sparrow  v.  Chisman,  9  Bam.  &  C.  241. 


5    lOj)  LIABILITIES    OF    PARTNERS    TO    THIKD    I'KKSONS.  235 

claims  the  benefit,  or  by  whose  acts  it  is  bound ;  and  (2)  that,  when 
it  is  necessary  to  prove  that  a  firm  had  notice,  all  that  need  be  done 
is  to  show  that  notice  was  given  to  one  of  its  members  as  the  af^ent 
and  on  behalf  of  the  firm.  The  expression  moans  no  more  tlian 
this;  and,  although  every  person  has  notice  of  what  he  himself 
does,  it  would  be  absurd  to  hold  that  a  firm  has  notice  of  everything 
done  by  each  of  its  members.  Where  one  nu'inber  is  acting  beyond 
his  powers,  or  is  committing  a  fraud  on  his  co-partners,  or  is  the 
person  whose  duty  it  is  to  give  his  firm  notice  of  what  he  himself 
has  done,  in  all  such  cases  notice  on  his  pai't  is  not  equivalent  to 
notice  by  him.^" 

LIABILITIES  OF  PARTNERS  TO  THIRD  PERSONS. 

101.  Partners  are  liable  to  third  persons  for  the  acts  of 
their  co-partners  when  acting  as  agents  of  the  firm. 
This  liability  is  either 

(a)  In  contract,  or  (p.  JoG) 

(b)  In  tort  (p.  242). 

Every  member  of  an  ordinary  partnership  Is  its  general  agent  fo: 
the  transaction  of  its  business  in  the  ordinary  way;  and  the  firm  i- 
responsible  for  whatever  is  done  by  any  of  the  partners  when  actini: 
for  the  firm  within  the  limits  of  the  authority  conferred  by  the  na 
ture  of  the  business  it  rarrirs  on.  This  liability  of  the  partnershlj* 
for  the  acts  of  its  members  rests  on  general  principles  of  agtmcv.'^" 

J2S  Williaiusun  v.  Barbour.  9  Ch.  DiT.  529.  535,  per  Jcssel.  .M.  U.  Cf.  Frank  v. 
Blake,  58  Iowa.  750,  13  N.  W.  .")0. 

i2»  Morse  t.  Riclunond.  97  lU.  303;  Seaman  t.  Ascherman,  57  Wis.  547,  15  N. 
W.  788:  Beecher  t.  Bush.  45  Mich-  188.  7  N.  W.  785;  Boardman  w.  Adams,  5 
Iowa,  224. 


236 


BIGUTS    AND    LIAKILITIi:3    AS    TO    THIRD    PEKSON3.  (.Cli.   6 


SAME— IN  CONTRACT. 
102.     Partners  are  liable  on  contracts  made  by  a  co-part- 
ner for  the  firm  when  the  contract  is 

(a)  Within  his  express  authority. 

(b)  Within  his  implied  powers. 

The  express  and  implied  powers  of  one  partner  to  bind  the  firm 
by  contracts  made  for  it  have  already  been  considered.''^  When- 
ever the  partner  has  authority  or  power  to  contract  for  the  firm,  his 
co-partners  are  liable  on  contracts  made  by  him.*"  If  an  act  is 
done  by  one  partner  on  behalf  of  the  firm,  and  it  was  necessary  for 
carrying  on  the  partnership  business  in  the  ordinary  way,  the  firm 
will  prima  facie  be  liable,  although  in  point  of  fact  the  act  was  not 
authorized  by  the  other  partners.  If  an  act  is  done  by  one  partner 
on  behalf  of  the  firm,  and  it  was  not  necessary  for  carrying  on  the 
partnership  business  in  the  ordinary  way,  the  firm  will  prima  fade 
be  not  liable.  In  tlie  fii-st  case  the  firm  will  be  liable  unless  the  one 
partner  had  in  fact  no  authority  to  bind  the  finn,  and  the  person 
dealing  with  him  was  aware  of  that  want  of  authority;  while  in  the 
second  case  the  firm  w\U  not  be  liable  unless  an  authority  to  do  the 
act  in  question,  or  some  ratification  of  it,  can  be  shown  to  have  been 
conferred  or  made  by  the  other  partners.*" 

103.  RESTRICTIONS    BY     DISSENT— One    partner   may, 
by  notice  of  his  dissent,  escape  liability  on  contracts 
otherwise   within   the  implied  powers  of  a  co-part- 
ner. 
A  partner  may  protect  himself  against  the  consequences  of  a  fu- 
ture contract  by  giving  notice  of  his  dissent  to  the  party  with  whom 
it  is  about  to  be  made.*"      Where  the  firm  consists  of  but  two  per- 

180  Ante,  pp.  211--34. 

181  Hutchiiis  T.  Turner,  8  Ilnmph.  (Tenn.)  415. 

182  1  Lindl.  Partn.  125.  citing  Crellin  v.  Brook,  14  Mees.  &  W.  11;  Dickinson  t. 
Valpy,  10  Barn.  &  C.  128.     And  see  Waldcn  v.  Sherburne,  15  Johns.  (N.  Y.)  422. 

188  Feigley  v.  Sponeborger,  5  Watts.  &  S.  (Pa.)  5G4;  Leavitt  v.  Peck,  3  Conn. 
125;  Johnston  v.  Button's  Adro'r,  27  Ala.  243;  Bradley  Fertilizer  Co.  t.  Cooke, 
104  Ala.  402,  16  South.  138;  Monroe  v.  Ck)nner,  15  Me.  178;  Gallway  t.  Mnthew, 
10  East,  2iA.     Cf.  Vice  v.  Fleming,  1  Youujje  &  J.  227.     The  implied  power  of 


§    1U4)  LIAlilLITIES    OF    PAKTKERS    TO    THIRD    PERSONS.  237 

s.ons,  and  there  is  notbing  in  the  articles  to  prevent  each  having  an 
equal  voice  in  the  direction  and  control  of  the  common  business,  the 
duty  of  each  partner  requires  him  not  to  enter  into  any  contract 
from  which  the  other  in  good  faith  dissents.  If  he  should  do  so,  it 
would  be  a  violation  of  the  obligations  which  are  imposed  by  the 
nature  of  the  partnership.  It  would  not,  in  fact,  be  the  contract  of 
the  lirm.  If  a  lii'm  is  composed  of  more  than  two  members,  and  one 
of  them  dissents  to  a  contemplated  contract,  the  party  with  whom 
the  contract  is  made  acts  at  his  peril,  and  cannot  hold  the  dissenting 
partner  liable,  unless  his  liability  results  from  the  partnership  arti- 
cles or  the  nature  of  the  piirtnership  contract.^**  The  DOwers  ot  a 
majority  in  such  cases  to  bind  dissenting  members  have  already  been 
considered.*'"'  \\here  goods  have  been  sold  to  a  firm  against  the 
known  wishes  of  a  dissenting  partner,  the  mere  fact  that  the  goods 
come  to  the  use  of  the  tirm  does  not  impo.se  any  liability  on  the  dis 
eenting  partner  to  pay  for  them,  for  the  purchase  may  have  been 
made  at  a  loss  which  he  foresaw,  and  therefore  sought  to  avoid.''"' 
Notice  of  dis.sfut  may  Ix*  effectively  given  by  a  dormant  partner,  and 
to  one  who  knew  nothing  of  the  t*xistence  of  the  imrtner.ship."' 
But  one  partner  cannot,  by  notice  to  a  debtor,  prevent  the  latter 
paying  the  amount  due  to  either  partner.*" 

104.  FORM  OF  CONTRACT— Partners  are  liable  on  con- 
tracts made  by  their  co-partners  only  -when  the  con- 
tract is  in  a  form  that  binds  the  firm  as  principal, 
and  not  the  partner  personally. 

The  general  proposition  that  a  partnership  is  bound  by  those  acts 
of  a  member  which  are  within  the  scope  of  his  authority  must  be 

one  partner  to  mortgaRe  firm  property  is  revoked  by  a  dissent  of  his  co-partuers, 
as  aj?ainst  a  mortRagee  who,  at  the  time  the  mortgage  was  given,  knew  of  thi- 
dissent.     Carr  t.  Hertz  (N.  J.  Ch.)  33  Atl.  194. 

i«*  Johnston  t.  Button's  Adm'r,  27  Ala.  245;  Monroe  v.  Conner,  15  Me.  178; 
Nolan  v.  Lovelock,  1  Mont.  224. 

"»  Ante,  p.  loH. 

»••  Monroe  t,  Conner,  15  Me.  178.      But  se**  Johnson  ».  Bemheim,  80  N.  C.  339. 

i«T  Leavitt  V.  Peck,  3  Conn.  124. 

i»«  Granger  v.  McGilvru.  24  IlL  152;  Noyes  v.  Railroad  Co.,  80  Conn.  L  And 
■e«  Steele  t.  Bank,  60  111.  23. 


238  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PKKSONS.  (Ch,   0 

taken  with  the  qualification  that  the  agent  whose  acts  are  sought  to 
be  imputed  to  the  fiiin  was  acting  in  his  character  of  agent,  and  not 
as  a  principal.  If  he  did  not  act  in  his  character  of  agent,  if  he  acted 
as  a  private  individual  on  his  own  account,  his  acts  cannot  be  im- 
puted to  the  firm,  and  he  alone  is  liable  for  them,  even  though  the 
firm  may  have  bem.-lired  by  them.  Whether  a  contract  is  entered 
into  by  a  partner  as  such,  or  by  him  as  an  individual,  is  often,  but 
not  always,  apparent  from  the  form  of  the  contract.*'* 

Sealed  Instruments. 

The  implied  power  of  one  partner  to  bind  the  firm  by  sealed  in- 
struments has  already  been  considered.**"  ^^^len  such  an  instru- 
ment is  executed  by  the  members  of  a  partnership,  it  is  usual  for 
each  partner  to  sign  his  name,  and  affix  his  seal;  but  one  seal  for  all 
is  sufficient,  the  single  seal  being  adopted  by  each  partner,  and  not 
being  the  seal  of  the  fiini.  for  that  has  no  seal.**'  And  where  one 
pai*tiiei*  signed  the  firm  name,  and  affixed  a  seal,  the  other  partner 
who  was  present  and  assented  was  held  liable.^*'  Where  one  part- 
ner, in  executing  an  instrument  for  the  firm,  unnecessarily  seals  it, 
the  seal  may  be  rejected,  and  the  other  partners  held  as  on  a  bill, 
note,  or  simple  contract,  as  the  case  may  be.^*' 

Negotiable  Instruments. 

In  controversies  involving  liability  upon  promissory  notes,  bills 
of  exchange,  bank  checks,  and  the  like,  the  name  of  the  firm  or  the 
names  of  all  the  partners  must  appear  to  have  been  expressly  sub- 
scribed to  or  indorsed  on  the  instruments,  as  the  case  may  be,  in  order 
that  the  firm  may  be  held  to  be  bound. ^**      If  it  appears  that  the  part- 

139  Liudl.  Pnrtn.  170. 
1*0  Ante,  p.  '2:12. 

141  Witter  V.  McNiel,  4  111.  A'AW:  Maekay  ▼.  Bloodgood.  9  Johns.  (N.  Y.)  28,^: 
McKnight  t.  Wilkins.  1  Mo.  220;  Pike  v.  Bacon.  21  Me.  280.  See,  as  to  form  of 
execution,  Berkshire  Co.  v.  Juillard,  75  N.  Y.  .^)35. 

142  Mackay  v.  Bloodgood,  9  Johns.  (N.  Y.)  285;  Moore  t.  Boyd,  15  Ont.  C.  P. 
513. 

148  Sweetzer  v.  Mead,  5  Mich.  107;  Tapley  v.  Butterfield.  1  Mete.  (Mas?.)  515; 
Price  V.  Alexander,  2  G.  Greene  (Iowa)  427;  Gibson  v.  Warden,  14  Wall.  247. 
Cf.  Purviance  v.  Sutherland,  2  Ohio  St.  478. 

i*<  Drake  v.  Elwyn.  1  Caines  (N.  Y.)  184;  Graeff  v.  Hitchman,  6  Watts  (Pa.) 
454;    Beebe  t.  Rogers,  3  G.  Greene  (Iowa)  319;    Michael  v.  Workman,  5  W.  Va. 


§  10 i)  UAiuLrriKS  of  paktnkrs  to  third  persons.  239 

ner  has  written  only  his  own  name  in  signing  or  indorsing  the  paper, 
then  nobody  but  himself  has  become  bound  by  his  act.^*"^  The 
persons  taking  a  note  which  fails  to  bind  the  firm  may  repudiate  it 
if  it  is  dishonored, ^*''  or  if  taken  in  conditional  payment.^ *^  A  part- 
ner is  bound  solely  when  he  has  written  some  name  by  which  the 
firm  cannot  be  held;  ^*'  but  the  firm  is  bound  if  the  firm  name  has 
merely  been  written  in  an  incorrect  form,  provided  the  variation 
is  not  substantial;  and  it  is  bound  even  then  if  it  has  habitually 
used  or  sanctioned  the  use  of  the  wrong  name.^*"  A  partner  in 
separate  firms,  both  having  the  same  name,  is  liable  to  be  sued  on 
the  obligations  of  both ;  but  the  liability  of  a  partner  in  but  one 
of  these  firms  will  depend  on  the  authority,  as  agent  of  this  partic- 
ular firm,  of  the  person  by  whom  the  obligation  was  signed  or  in- 
dorsed, and  also  on  the  identification  of  this  firm  aa  the  obligor  in- 
tended.'»° 

Simple  Contracts. 

In  transactions  other  than  those  evidenced  by  commercial  paper, 
the  name  of  the  firm  expressly  employed  is  not  essential  to  the  lia- 
bility of  the  piirtnersliip,  if  the  agency  for  the  fii'm  transpires  suflB- 

391;  Emly  t.  Lye.  15  East,  7;  Faith  v.  Richmond.  11  Adol.  &  E.  339.  Bat  see 
Bottomlcy  t.  Nuttall.  5  C.  B.  (N.  S.)  122;  Denton  v.  Ro<lie,  3  Camp.  493;  Duniiicf. 
V.  Clinkscales,  73  Mo.  500;   Heenan  t.  Nash,  8  Minn.  407  (Gil.  3G3). 

i<8Le  Roy  v.  .Johnson.  2  Pet,  186;  National  Bank  v.  Thomas.  47  N.  Y.  15; 
Green  t.  Tanner,  8  Mete.  (Mass.)  411;  Ostrom  v.  Jacobs,  9  Mete.  (Mass.)  454; 
Siegel  V,  Chidsey,  28  Pa.  St.  279;  GraefE  t.  Hitchman,  5  Watts.  (Pa.)  454;  Brozee 
V.  Poyntz.  3  B.  Mon.  (Ky.)  178;  Owen  v.  Van  Uster.  20  Law  J.  C.  P.  61;  Gates 
V.  Hughes,  44  Wis.  ZiVl. 

i*«  First  Nat.  Bank  v.  Morgan,  73  N.  Y.  593;  Claflin  v.  Ostrom,  54  N.  Y.  581; 
.Vdler  V.  Foster.  39  Mich.  87. 

i«T  Claflin  V.  Ostrom,  54  N.  Y.  581;  Titos  t.  Todd's  Adra'r,  25  N.  J.  Eq.  458. 
.Vnd  see  Goodspced  v.  Plow  Co.,  45  Mich.  'I'M,  7  N.  W.  810;  Turnbow  v.  Broach, 
12  Bush.  (Ky.)  4.=j5. 

!♦«  Palmer  v.  Stephens,  1  Denio  (N.  Y.)  471;  Hambro  ▼.  Official  Manager,  3 
Hurl.  &  N.  789;  Faith  v.  Richmond.  11  Adol.  &  E.  339;  Kirk  t.  Hlurton.  9 
Mees.  &  W.  2S4. 

149  Kinsman  v.  Dallam,  6  T.  B.  Mou.  (Ky.)  382;  Williamson  v.  Johnson,  1 
Bam.  &  C.  146;  Lloyd  v.  Ashby,  2  Bam.  &  Adol.  17.  Cf.  Carney  ▼.  Hotdikiss, 
48  Mich.  276.  12  N.  W.  182. 

iBo  Miner  v.  Downer,  19  VL  14;  Gushing  v.  Smith,  43  Tei.  2(J1;  Swan  t. 
Steele,  7  East,  210. 


240  BIGHT3    AND    LIABILITIES    AS    TO    T^IKD    PERSONS.  (Ch.   6 

ciently  from  the  facts  in  each  case  surrounding  the  transaction. 
It  frequently  happens  that  the  liability  of  the  firm  becomes  a  ques- 
tion in  cases  where  the  name  of  the  firm  has  not  appeared  at  all, 
and,  but  for  the  aid  afforded  by  such  facts,  the  act  might  be  that 
of  the  person  alone  apparent  at  the  time,  where  even  there  has  been 
no  actual  purpose  to  conceal  the  fact  that  the  firm  is  the  real  party 
concerned.*'*  The  cases  where  such  a  purpose  was  present  are 
govenied  by  the  general  law  of  principal  and  agent,  the  rule  as  to 
undisclosed  principal  being  invariably  invoked.  This  rule  is  that 
the  party  aggrieved  by  the  concealment  has  his  election  between 
holding  the  other  personally  liable  or  proceeding  against  his  princi- 
pal upon  the  agency  being  disclosed.*" 

Firm  Benefited  hy  Partner'' 8  Contract. 

It  is  an  erroneous,  but  popular,  notion  that,  if  a  firm  obtains  the 
benefit  of  a  contract  made  with  one  of  the  partners,  it  must  needs 
be  bound  by  that  contract.  Now,  although  the  circumstance  that 
the  firm  obtains  the  benefit  of  a  contract  entered  into  by  one  of  its 
members  tends  to  show  that  he  entered  into  the  contract  as  the 
agent  of  the  firm,*"*  such  circumst.once  is  no  more  than  evidence 
that  this  was  the  case;  and  the  question  upon  which  the  liability 
or  nonliability  of  the  firm  upon  a  contract  depends  is  not,  has  the 
firm  obtained  the  benefit  of  the  contract,  but  did  the  firm,  by  one 
of  its  partners  or  otherwise,  enter  into  the  contract.*'* 

Same — Money  Borroioed  hy  One  Partner. 

So,  in  ordinary  cases,  when  one  partner  borrows  money  without 
the  authority  of  his  co-partners,  the  contract  of  loan  is  with  him. 
and  not  with  the  firm;   and  the  nature  of  that  contract  is  not  al- 

iBi  Clement  t.  Assurance  Co.,  141  Mass.  298,  5  N.  E.  847;  Beckham  v.  Drake, 
9  Mces.  &  W.  79;    s.  c,  sub   nom.  Drake  v.  Beekliimi.  U  Mcos.  &  W.  '6\^. 

102  Morse  v.  Richmond,  97  111.  30;>:  Howell  v.  Adams,  OS  N.  Y.  314;  Reynolds 
V,  Cleveland,  4  Cow.  (N.  Y.)  282;  Mifflin  v.  Smith,  17  Serg.  &  R.  (Pa.)  165; 
McNair  v.  Rewey,  62  Wis.  167,  22  N.  W.  339;   Vere  t.  Asbby,  10  Barn.  &  C.  288. 

i68Beekbam  v.  Drake,  9  Mees,  &  W.  100,  per  Rolfe,  B.  And  see  Duncan  v. 
Lewis,  1  Duv.  (Ky.)  183;   Lincoln  Sav.  Bank  v.  Gray,  12  Lea  (Tenn.)  459. 

164  Atwood  V.  Lockhart,  4  McLean,  350,  ¥cA.  Gas.  No.  642;  Brooke  t.  Evans, 
5  Watts  (Pa.)  196;  Donnally  v.  Ryan,  41  Pa.  St.  306;  National  Bank  of  Com- 
merce V.  Meader,  40  Minn.  325,  41  N.  W.  1043;  Wittram  v.  Van  Wormer,  44  Dl. 
525;   Watt  v.  Kirby,  15  lU.  200. 


§    104)  LIABILITIES    OF    PARTNERS    TO    THIRD    PERSONS.  241 

tered  by  his  application  of  the  money.     The  lender  of  the  money 
has,  therefore,  no   right  to  repayment  by  the  firm,   although   the 
money  may  have  been  applied  for  its  benefit, ^^'^  unless  he  can  bring 
himself  within  the  equitable  doctrine  referred  to  below. 
Same —  Goods  Supplied  to  One  Partner. 

The  same  rule  applies  to  goods,  services,  and  works  supplied  to 
or  done  for  one  partner,  either  on  his  own  account,  or  if  for  the 
firm,  at  the  request  of  one  of  its  members  acting  beyond  the  lim- 
its of  his  apparent,  as  well  as  of  his  real,  authority.  The  firm  does 
not,  in  any  case  of  this  sort,  enter  into  any  contract,  express  or  im- 
plied, with  the  person  dealing  with  the  partner  in  question,  and 
does  not  incur  any  obligation  towards  that  person  by  reason  of  the 
circumstance  that  it  gets  the  benefit  of  what  he  has  done."* 
Satne — MUapprvpriation  of  Trust  Funds. 

The  principle  of  these  decisions  governs  those  cases  in  which 
one  partner,  in  breach  of  trust,  but  without  the  knowledge  or  con- 
sent of  his  co-partners,  api'lies  trust  money  over  which  he  has  con- 
trol as  a  tru:^tee  to  the  jtui-poses  of  the  firm.  The  fact  that  the 
firm  has  been  benefited  b\  the  money  in  question  does  not  neces- 
sarily render  it  liable  to  the  owners  of  the  money."* 
Same — Equ'Uahle  Doctrine  in  Tliese  Cases. 

Where,  however,  money  borrowed  by  one  partner  in  the  name  of 
the  firm,  but  without  the  authority  of  his  co-partners,  has  bwn  ap- 
plied in  paying  off  debts  of  the  finn,  the  lender  is  entitled  in  equity 
to  repayment  by  the  firm  of  the  amount  which  he  can  show  to  have 
been  so  applied;  and  the  same  rule  extends  to  money  bona  fide 
boriHDwed  and  applied  for  any  other  legitimate  pur7)ose  of  the 
firm."'  This  doctrine  is  founded  partly  on  the  right  of  the  lender 
to  stand  in  equity  in  the  place  of  those  creditors  of  the  firm  whose 

IBB  Green  ▼.  Tanner,  8  Mete.  (Mass.)  411;  Willis  v.  Bremner.  60  Wis.  622,  19 
N.  W.  403;  National  Bank  v.  Thomas,  47  N.  Y.  15;  Graefif  t.  Hitchman,  5  Watts 
(ra.)  454:    Le  Roy  v.  Johnson,  2  Pet  18<3. 

158  Wittram  v.  Van  Wormer.  44  111.  525;  Morlitaer  t.  Bernard,  10  Heisk. 
(Tenn.)  361. 

167  Ex  parte  Apsey,  3  Brown,  Ch.  265;    Ex  parte  Heaton,  Buck,  386. 

i»«  Ex  parte  Chippendale,  4  De  Gex,  M.  &  G.  19;  Blackburn  Building  Soc 
r.  Cunliffe,  22  Ch.  Dir.  61;  Baroness  Wenlock  t.  Riyer  Dee  Oo.,  19  Q.  B.  DIt. 
155. 

GEO.PART.— 16 


242  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (J^h.  6 

claims  have  been  paid  off  by  his  money,  and  partly  on  the  right  of 
the  borrowing  partner  to  be  indemnified  by  the  firm  against  liabili- 
ties bona  fide  incurred  by  him  for  the  leg:itimate  purpose  of  reliev- 
ing the  firm  from  its  debts,  or  of  candying  on  its  business.  The 
equitable  doctrine  in  question  is  limited  in  its  application  to  cases 
falling  under  one  or  other  of  the  principles  above  indicated.*** 

SAME— IN  TORT. 

105.  In  order  that  responsibility   be  attached  to  a  partner 
with  respect  to  a  tort,  it  is  necessary  either 

(a)  That  he  should   have   authorized   it  or  joined  in  its 

commission  in  the  first  instance; 

(b)  That  he   should  have   made  it  his  o-wrn  by  adoption; 

or 
(0)  That  it  should  have  been    committed   by  his  co-part- 
ner  in   the   course  and  as  a  part   of   his   employ- 
ment.'" 

Where  a  partner  authorizes  the  commisprion  of  a  tort,  he  has  done 
it  himself,  and  is  of  course  liable.      So,  where  he  joins  in  its  coramis 
sion,  his  liability  is  rather  that  of  a  joint  tort  feasor  pure  and  sim 
pie,   because  of   participation,  than   that   of  a   partner,  because  of 
relationship.*"      Indicd.    tli<'   partnership   relation   would   have  no 
connection  as  cause  of  the  wronj^doing.      Retention  of  benefit  dt^ 
rived   from   a   partner's  unauthorized   tort   will   attach    liability   to 
all  partners."*      The  only  questions  involving  difficulty  as  to  the 
liability  of  partners,  therefore,  lu-e  those  where  the  liability  arises 
from   the   relationship.      It  has  been   recognized   generally  by  text 
writers  that  the  law  of  partnership  is  a  branch  of  the  law  of  agency. 
Consequently,  it  is  said  that  a  partner,  like  a  principal,  is  not  liable 
for  the  willful  acts  of  his  co-partner,  if  not  done  in  course  of  his  em- 
it* Lindl.  Partn.  191. 
x«o  Lindl.  Partn.  §  209. 

»«i  Graham   ▼.   M<  yrr.   4   Blatchf.    129,   Fed.   Cas.   No.  .^t;7•_'      24    Meyer.    Fed. 
Dec.  131. 

i«2  Ante.  p.  209,  'Joint  Tort  F^easors";    U.  S.  t.   Baxter,  4(>  Fed.  350;    Bieneo- 
■tok  V.  Ammldown  (Super.  N.  Y.)  29  N.  Y.  Supp.  593. 


§    105)  LIABILITIES    OF    PAHTNEUS    TO    THIRD    PERSONS.  243 

ployment,  and  as  part  of  the  business;  and  this  is  true  not  only  of 
assault,  battery,  libel,  and  the  like,  but  also  of  fraud.^*' 

A  firm  of  butchers,  one  member  of  which,  in  furtherance  of  the 
partnership,  by  negligence  causes  poisoned  meat  to  be  placed  where 
dogs  might  reasonably  be  expected  to  get  it,  is  liable  to  an  owner 
of  a  dog  which  dies  from  eating  such  meat."*  When  one  partner 
procures  goods  by  false  representations,  and  fraudulently  disposes 
of  them,  all  the  partners  are  jointly  liable."'  Where  one  member 
of  a  firm,  holding  a  chattel  mortgage  on  the  goods  of  a  person  in 
default,  forcibly  enters  the  premises  of  the  mortgagor,  and  by  force 
takes  possession  of  the  mortgaged  property,  and  in  doing  so  commits 
an  asBiiult  ujion  the  mortgagor,  his  co-partner  is  not  liable  in  dam- 
ages for  the  assjiult.***  Fraud  on  the  part  of  one  partner  in  pro- 
curing a  note  is  available  as  a  defense  to  an  action  thereon  by  the 
firm."^ 

As  to  what  is  so  within  and  a  part  of  tlie  business  as  to  attach 
liability  to  a  co-partner,  the  cases  may  not  have  gone  as  far  towards 
holding  to  a  mutual  responsibility  as  in  the  case  of  master  and 
servant.  It  has,  however,  been  held  that,  if  one  of  several  partners 
drive  a  coach  negligr'ntly,  a  person  injured  thereby  may  sue  the 
driver  in  trespass,  or  all  the  partners  in  case.*'*  Partners  are 
jointly  liable  for  statements  made  by  one  of  them  in  derogation  of 
a  conii>ctitor.  in  aid  of  their  business,*""  for  misrepresentation  as 
to  lands  exchanged,""  for  abus<'  of  trust  funds."*  for  death  by  the 

>o3  I.indl.  Pnrtn.  5  200;  Cooley.  Torts,  pp.  5.Ti,  SlUi;  Ewell's  Evans  on 
Agency,  p.  ISO;    Stockwoll  t.  U.  S..  3  Cliff.  2K4.  Fed.  Cus.  No.  13,4Ga. 

i«*  Dudley  V,  I^ove,  1  Mo.  App.  Rcp'r.   1S.>. 

»«B  Banner  v.  Schlcssinpcr  (Mich.)  67  N.   \V.   IIG. 

>8«  'ntconib  V.  James,  57  111.  App.  20(>. 

i«7  Kilpore  t.  Bruce  (Mass.)  44  N.  E.   108. 

»«8  Moreton  v.  Hjirderr.,  4  Barn.  &  C.  22.'?;  Ashworth  t.  Stanwix.  liO  L.  J. 
Q.  B.  183.  So,  where  two  attoraeys  are  in  partnership,  both  are  liable  for  tile 
unsuccessful  conduct  of  cHent's  business.  Warner  v.  Hriswold.  8  Wend.  (Mj.*!; 
Poole  V.  Gist.  4  McCord,  2.^9.  And  see  Rhodei  t.  Monies  [1805]  1  Uh.  2;{(>; 
Dudley  v.  Love,  GO  Mo.  App.  420. 

i«»  Haney  Manufg  Co.  v.  Perkins,  78  Mich.  1,  43  N.  W.  1073. 

iTo  Stanhope  t.  Swafford,  80  Iowa,  4^,  45  N.  W.  403.  And  see  Gooding  v. 
Underwood,  89  Mich.  187.  50  N.  W.  818. 

>T»  Appeal  of  Hau.  144  Pa.  St.  304,  22  Atl.  740,  Cf.  Hawley  t.  Tesch,  88  Wis. 
213.  50  N.  W.  G70. 


244  RIGHT3    AND    LIABILITIES    AS    TO    THIRD    PilKSONS.  (Ch.   6 

wrongful  act  of  a  co-paitner,^^*  and  for  an  ilUgal  agreement  to  pay 
rebate,^"  Similai-lv,  where  one  partner  acts  for  the  firm  in  de- 
manding illegal  charges  and  detaining  the  goods  until  they  are 
paid,  every  member  of  the  firm  is  liable  in  damages."* 

As  to  what  is  not  within  the  course,  and  not  a  part,  of  p:irtner- 
ship  business,  it  would  appear  that  a  partner  is  not  liable  for  the 
willful  act  of  his  partner,  not  because  it  is  willful,  but  because  it 
is  outside  of  the  partnership  busim-ss."'  Thus,  one  partner  is  not 
liable  for  malicious  prosecution  instituted  by  his  co-partner  for 
the  larceny  of  partnership  proiHTty,  unless  he  advised  or  partici- 
pated in  It,  and  then  only  in  his  individual  capacity.*"  While, 
as  has  been  shown,  the  piirtner  may  be  liable  for  the  libelous  words 
of  a  co-partner,  still  the  co-partner  may.  in  connection  with  the 
business,  publish  a  libel  for  which  the  only  responsibility  is  his 
Individually.  Thus,  where  a  furniture  company  placiu-ded  furni- 
ture: "Taken  back  from  Doctor  W.,  as  he  could  not  pay  for  it.  For 
sale  at  a  bargain.  .M<.ral:  P.eware  of  dtad  beats!"— this  libel 
was  held  to  be  the  act  of  the  individual.  It  had  nothing  to  do  with 
the  partnership.  The  partners  other  than  the  one  actually  pub- 
lishing it  were  not  liable,  unless  in  some  way  they  authorized  the 
publication.*^^  A  co-partmr  is,  of  course,  not  liable  for  the  eon- 
version  by  another  partner  to  his  own  use  of  a  third  person's  prop- 
erty.*"  In  ca-se  several  persons  are  sued  as  partnere  for  a  tort, 
and  no  partnership  is  established,  the  verdict  may  be  apiinst  one 
only,  if  the  tort  is  established  against  him.'"  Even  for  torts,  where 
liability  is  attached  to  partners  because  of  wrong  done  in  course 

17  i  Sapors  T.  Nuckolls,  3  Colo.  App.  05.  32  Vn.  187. 
178  MoEwen  ▼.  Shannon,  G4  Vt.  583.  25  Atl.  601. 
17*  Lockwood  T.  Burtlett.  130  N.  Y.  340.  29  N.  E.  257. 
17  8  1  Bates,  Tartn.  §  4<j7. 

17a  Marks  v.  Hastings,  101  Ala.  106,  13  South.  2i)7;  Farrell  t.  Freidlander, 
63  Hun.  254,  18  N.  Y.  Supp.  215. 

177  Woodljng  v.  Knickerbocker,  31  Minn.  288,  17  N.  W.  387;  BIyth  t.  Fladgute 
(1801)  1  Ch.  337.      But  see  Bienenstok  v.  Animidown,  supra. 

178  Stokes  V.  Bumey,  3  Tes.  Civ.  App.  219.  22  S.  W.  12U:  Townsend  t.  Hagar. 
19  C.  C.  A.  256,  72  Fed.  940.  Liability  in  replevin.  Tanco  t.  Booth  (CJom.  PI. 
N.  Y.)  15  N.  Y.  Supp.  110. 

i7»  Austin  V.  Appling,  88  Ga.  54,  13  S.  E.  055.  And  see  Fay  v.  Davidson,  13 
Minn.  623  (Gil.  491). 


§§    106-108)  JOINT    AND   SEVERAL    LIABILITY.  246 

of  partnership  business,  the  injured  party  may  sue  all  the  partners, 
or  any  one  or  more  of  them,  at  his  election.^ •" 


JOINT  AND  SEVERAL  LIABILITY. 

106.  On  firm  contracts  the  partners  are  jointly  liable  only, 

unless  the  contract  expressly  imposes  a  several  lia- 
bility. 

107.  In  some  states,  by  statute,  partners  are  made  jointly 

and  severally  liable. 

108.  For  torts  the  partners  are  both  jointly  and  severally 

liable. 

Cojitracta. 

Each  co-partner  is  bound  for  the  entire  amount  due  on  co-part- 
nership contracts;*"'  and  this  oMipition  is  so  far  several  that  if 
he  is  sued  alone,  and  dors  not  plead  the  nonjoinder  of  his  co-part- 
ners, a  recovery  may  he  had  against  him  for  the  whole  amount  due 
upon  the  contiact,**=  and  a  joint  judgment  against  the  copartners 
may  be  enforced  against  the  property  of  each."*  But  this  is  a  dif- 
ferent thing  from  the  liability  which  arises  from  a  joint  and  several 
contract.  There  the  contract  contains  distinct  engagements, — that 
of  each  c^outractor  individually,  and  that  of  all  jointly;  and  differ- 
ent remedies  may  be  pursued  upon  each.  The  contractors  may  be 
sued  separately  on  their  several  engagements  or  together  on  their 
joint  undertaking.*'*  Rut  in  co-partnerships  there  is  no  such  sev- 
eral liability  of  the  co-partners.  The  co-partnerships  are  formed  for 
joint    purposes.      The    members   undertake   joint    enterprises;    they 

>»o  Wisconsin  Cent  R.  Co.  t.  Ross.  142  111.  9.  31  N.  E.  412.  collecting  cases  at 
pape  10.  142  III.,  and  page  412,  81  N.  E.;  Walker  v.  Trust  Co..  72  Uun.  334,  25 
N.  Y.  Supp.  432.     Cf.  Whittnker  t.  Collins.  ^4  Minn.  21>9.  25  N.  W.  632. 

By  far  the  ablest  and  clearest  discussion  of  the  liabiUty  of  a  partner,  general 
and  special,  for  the  torts  of  a  co -partner  is  to  be  found  in  chapter  9  of  Principle! 
of  Partnership,  by  James  Parsons  (1SS9). 

181  Judd  Linseed  &  Sijorm  Oil  Co.  v.  Ilubbell.  76  N.  Y.  543;  Morrell  t.  Insur- 
ance Co..  10  Cush.  282:    Waujrh  v.  Carver.  2  H.  Bl.  235. 

"«  Barry  v.  Foyles.  1  Pet.  311.  ih3  Post.  p.  ji-j.  i«4  cinrk,  Cent  603. 


246  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   G 

assume  joint  risks;  and  thej  incur  in  all  cases  joint  liabilities.^" 
In  all  co-partnership  transactions  this  common  risk  and  liability  ex- 
ist. Therefore  it  is  that,  in  suits  upon  these  transactions  all  the 
co-partners  must  be  brought  in,  except  when  there  is  some  ground 
of  personal  release  from  liability,  as  infancy  or  a  discharge  in  bank- 
ruptcy; and,  if  not  brought  in,  the  omission  may  be  pleaded  in 
abatement.^**  The  partners  may,  of  course,  so  word  their  contracts 
that  they  will  be  jointly  and  severally  liable.*" 

Same — Release  of  One  Partner. 

A  release  of  one  partner  from  a  partnership  debt  disrhargea  all 
the  others;  ***  for  where  several  persons  are  bound  jointly,  or  joint- 
ly and  severally,  a  release  of  one  is  a  release  of  them  all.*** 

Same — Coi'&nant  not  to  Sue. 

But  in  this  respect  a  covenant  not  to  sue  differs  from  a  release; 
for  although,  where  there  is  only  one  debtor  and  one  creditor,  a 
covenant  by  the  latter  never  to  sue  the  former  is  equivalent  to  a 
release,  it  has  been  decided  on  several  occasions  that  a  covenant 
not  to  sue  does  not  operate  as  a  release  of  a  debt  owing  to  or  by 
»))h(>r  iicrsdiis  besides  those  who  ai*e  parlies  to  the  eoveiniut.' '"  If 
a  release  is  so  drawn  as  to  show  that  it  was  intended  to  inure  only 
for  the  benefit  of  the  releasee  personally,  and  not  to  avail  even 
him  in  an  action  by  the  releasor  against  the  releasee,  jointly  with 
other  people,  then  persons  jointly  liable  with  him  in  resjH'ct  of  the 
debt  released  will  not  be  discharged  therefrom.     In  such  a  caae  the 

i«B  That  partnership  notes  are  joint  only,  see  Crosby  t.  Jerolomnn,  37  Ind.  2G4; 
Brown  v.  Fitch,  33  N.  J.  Law,  418. 

1S8  Ma5?ou  V.  Eldred,  G  Wall.  231;  Fish  ▼.  Gates.  133  Mass.  441;  L>ob  t. 
Halsey,  IG  Johns.  (N.  Y.)  34:  Page  v.  Brant.  18  lU.  37;  Stutta  ▼.  Chafee,  48  Wis. 
n7,  4  N.  W.  7G3;    Adams  v.  May,  27  Fed.  907. 

187  See  Beresford  v.  Browning,  1  Ch.  Div.  30. 

188  Tiickorman  v.  Newhall,  17  Mass.  581;  Evans  v.  Carey,  29  Ala.  99;  U.  S. 
T.  Thompson,  Gilp.  614,  Fed.  Gas.  No.  1G.487;  Ei  parte  Slater,  6  Ves.  146; 
Bower  v.  Swadlln,  1  Atk.  294. 

189  Clark,  Cont.  557;   Wiggin  v.  Tudor,  23  Pick.  434. 

180  Gooduow  T.  Smith,  18  Pick.  414;  Kenworthy  t.  Sawyer,  125  Mass.  23; 
Dean  v.  Newhall,  8  Term  R.  1G8;  Walmesley  v.  Cooper,  11  Adol.  &  E.  210; 
Button  T.  Eyre,  6  Taunt.  289. 


§.i    in()-l()8)  JOINT    AXD    SEVKUAL    LIABILITY.  247 

deed  will  itself  show  tliat  it  was  not,  in  fact,  intended  to  operate 
as  a  release. 

Same — Judgment  against   One  Partner. 

A  judgment  against  one  upon  a  joint  contract  of  several  persons 
bars  an  action  against  the  others,  though  the  latter  were  dormant 
partners  of  the  defendant  in  the  original  action,  and  this  fact  was 
unknown  to  the  plaintiff  when  that  action  was  commenced.^"  When 
the  contract  is  joint,  and  not  joint  and  several,  the  entire  cause 
of  action  is  merged  in  the  judgment.  The  joint  liability  of  the 
parties  not  sued  with  those  against  whom  the  judgment  is  recov- 
ered being  extinguished,  their  entire  liability  is  gone.  They  can- 
not be  sued  separately,  for  they  have  incurred  no  several  obligation. 
They  cannot  be  sned  jointly  with  the  others,  because  judgment  has 
been  already  recovered  against  the  latter,  who  would  otherwise  be 
subjected  to  two  suits  for  the  same  cause.^*" 
Stniu — Joint  and  Sn-eiuil  Liahiliti/  by  Statute. 

"Joint  contracts  or  contracts  which  would  be  joint  by  the  common 
law  are  in  many  slates  declared  to  be  construed  as  joint  and  sev- 
eral." *»»     These  statutes  apply  to  contracts  made  by  partners.*" 

For  torts  imputable  to  a  firai,  all  the  partners  are  liable  jointly 
and  severally.***  To  this  general  rule  an  exception  occurs  where  an 
action  ex  delicto  is  brought  against  sevei-al  persons  in  respect  of 
their  ownership  in  land,  for  then  they  are  liable  jointly,  and  not 
jointly  and  severally.*** 

101  Mason  t.  Eldred,  G  Wall.  231;  Smith  t.  Black.  9  Serg.  &  R.  (Pa.)  142; 
Olmstead  v.  Webster.  8  N.  Y.  413;    Robertson  v.  Smith,  18  Johns.  (N.  Y.)  459. 

1"^  Muson  V.  Eldred,  U  Wall.  231. 

i»8  1  Rtim.  Am.  St.  I.:i\v.  §§  4113,  5014,  5015. 

i9«  Neil  V.  Childs,  10  Ired.  (N.  C.)  195;  Burgen  t.  Dwinal,  11  Ark.  314;  Wil- 
liams v.  Mutherbaii^h,  29  Kan.  730.  The  following  states  have  changed  the  lia- 
bility of  partners  into  a  joint  and  several  liability:  Alaliama,  Arkansas,  Colorado, 
Georgia,  Kansas,  Kentucky,  Mississippi,  Missouri,  Montana,  New  Jersey,  New 
Mexico,  North  Carolina,  Tennessee. 

198  Linton  t.  Hurley,  14  Gray  (Mass.)  191;  Wood  ▼.  Luscomb,  23  Wis.  287; 
Bowas  V.  Tow  Line,  2  Sawy.  21,  Fed.  Cas.  No.  1,713;  Mitchell  v.  Tarbutt,  5  Term 
R.  649. 

i»«  Lindl.  Partn.  198,  citing  1  Wm.  Sauud.   291f,  291g. 


248  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

Same — Distinction  letween  Torts  and  Breaches  of  Contract. 

Although  for  general  purposes  it  may  be  convenient  to  distribute 
acts  and  forbearances  which  give  rise  to  obligations  under  the  heads 
breach  of  contract  and  tort,  it  would  not  be  difficult  to  show  the  im- 
possibility of  always  distinguishing  between  the  two.  And  yet  if 
a  breach  of  a  contract  binding  on  the  firm  imposes  a  joint  liability 
only  on  its  living  members,  while  a  tort  imputable  to  the  firm  im- 
poses a  joint  and  several  liability,  the  importance  of  being  able  ac- 
curately to  distinguish  between  a  breach  of  contract  and  a  tort 
becomes  apparent.  The  difficulty,  however,  of  doing  so,  is  increased 
by  the  doctrine  that  there  are  cases  in  which  the  same  breach  of 
an  obligation  may  be  regai'ded  from  two  different  points  of  view, 
and  may,  at  the  oi)ti()U  of  the  pei-son  injured,  be  made  the  founda- 
tion either  of  an  action  ex  contractu  or  of  an  action  ex  delicto.^"^ 
Suppose,  for  example,  that  property  is  intrusted  to  a  firm  of  bank- 
ers for  the  purpose  of  sale  and  investment,  and  that  some  member 
of  thp  banking  firm  misapplies  the  property  so  intrusted.  This 
breach  of  duty  is  a  broach  of  the  contract,  which  was  tacitly,  if 
not  expressly,  entered  into  by  the  bankers  when  they  received  the 
property.  But  the  mis;jpplication  of  the  proi)erty  is  a  wrong  in- 
dependently of  any  contract,  amounting,  in  effect,  to  a  conversion 
or  destruction  of  that  which  belonged  to  the  customer.^"* 

Same — Breaches  of  Trust. 

In  equity,  the  misapplication  of  the  money  is  a  breach  of  trust, 
and  imposes  a  joint  and  several  liability  on  all  the  partners,  on 
the  ground  that  each  partner  is  bound  to  see  to  the  proper  appli- 
cation of  what  is  intrusted  to  the  firm.""  In  such  cases  as  these, 
the  several  liability  of  each  partner  to  the  creditors  of  the  firm  is 
not  affected  by  the  circumstance  that  the  act  imposing  such  lia- 
bility was  done  by  one  only  of  the  members  of  the  firm  without  the 
knowledge  or  consent  and  in  fraud  of  the  others.""  If  the  act 
in  question  imposes  a  liability  which,  upon  the  principles  of  agency, 

197  Brown  t.  Boorman,  11  Clark  &  F.  1;  Fleming  v.  Railway  Co.,  4  Q.  B.  Dir. 

81. 
io«  1  LindL  Partn.  199. 

188  Nisbet  T.  Patton,  4  Rawle  (Pa.)  120;  Plumer  t.  Gregory,  L,  R.  18  Eq.  621. 
200  Brydgea  v.  Brunfill,  12  Sim.  369. 


§    109)  EXTENT    OF    LIABILITY.  249 

can  be  imputed  to  the  firm,  each  member  thereof  is,  in  equity,  sev- 
erally liable  for  such  act,  just  as  much  as  if  there  had  been  uo  fraud 
in  the  case;  and  it  is  well  established  in  equity  that  a  breach  of 
trust  which  is  imputable  to  several  persons  imposes  upon  them  a 
liability  which  is  both  joint  and  several.*"* 


EXTENT  or  LIABILITY. 

109.  Each  partner  is  liable  for   the  whole  amount  of  the 
partnership  debts. 

By  the  common  law,  every  member  of  an  ordinary  partnership 
is  liable  in  solido  for  the  debts  and  engagements  of  the  firm.  The 
iaw  ignoring  the  firm  as  imything  distinct  from  the  persons  compos- 
ing it  treats  the  debts  and  engagements  of  the  firm  as  the  debts  and 
engagements  of  the  partners,  and  holds  each  partner  liable  for 
them  accordingly.-"*  Moreover,  if  judgment  is  obtained  against 
the  film  for  a  debt  owing  by  it,  the  judgment  creditor  is  under  no 
obligation  to  levy  execution  against  the  property  of  the  firm  before 
having  recourse  to  the  separate  property  of  the  partners;  nor  is  he 
under  any  obligation  to  levy  execution  against  all  the  partners  rata 
bly,  but  he  may  select  any  one  or  more  of  them,  and  levy  execution 
upon  him  or  them  until  the  judgment  is  satisfied,  leaving  all  ques 
tions  of  contribution  to  be  settled  afterwards  between  the  partners 
themselves.*"^  Limited  partnerships,  in  which  some  of  the  part 
ners  are  not  liable  for  the  whole  amount  of  the  firm  obligations,  will 
be  considered  in  a  subsequent  chapter.*"* 

201  Guillou  V.  Peterson.  89  Pa.  St.  163;   Colt  v.  Lasnier.  9  Cow.  (N.  Y.)  320. 

202  Benchley  t.  Chapin,  10  Cush.  (Mass.)  173;  Allen  v.  Owens,  2  Spears  (S.  C.) 
170;  Nebraska  Ry.  Co.  v.  Lett,  8  Neb.  251.  The  firm  is  liable  in  solido  for  the 
torts  of  one  partner  if  committed  by  him  as  a  partner,  and  io  the  course  of  the 
partnership  business.    Loomis  v.  Barker,  69  IlL  360. 

208  Dean  t.  Phillips,  17  Ind.  406. 
20*  I'ost.  p.  -ill,  c.  ID. 


250  RIGHTS    AND    LIABILITIES    AS    TO    THIMD    PERSONS.  (Ch.   6 


BEGINNING  OP  LIABILITY. 

110.  As  to  the  beginning  of  the  liability  of  partners,  the 
following  are  the  principal  rules: 

(a)  There  is  no  liability  as  partners   before   the    firm    is 

formed  (p.  250). 

(b)  There  may  be   liability  before  the   partnership  arti- 

cles are  executed  (p.  250). 

(c)  The  firm  is  not  liable  for  what  a  partner  does  before 

he  joins  it  (p.  251). 

Formation  of  Partnership. 

The  doctrine  that  each  partner  has  implied  autharity  to  do  what- 
ever is  necessary  to  carry  on  the  partnership  business  in  the  usual 
way  is  based  upon  the  ground  that  the  ordinary  business  of  a  firm 
cannot  be  carried  on  either  to  the  advantage  of  its  members  or  with 
safety  to  the  public,  unless  such  a  doctrine  is  recognized.  The  ex- 
istence of  a  partnership  is  therefore  evidently  presupposed;  and  al- 
though persons  negotiating  for  a  partnership,  or  about  to  become 
partners,  may  be  the  agents  of  each  other  before  the  partnership 
commences,  such  agency,  if  relied  on,  must  be  established  in  the  or- 
dinary way,  and  is  not  to  be  inferred  from  the  mere  fact  that  the 
persons  in  question  were  engaged  in  the  attainment  of  some  com 
mon  end,  or  that  they  have  subsequently  become  partners."*' 

Execution  of  Articles  Deferred. 

But,  although  this  is  undoubted  law,  still  if  persons  agree  to  be- 
come partners  as  from  a  future  day,  upon  terms  to  be  embodied  in 
a  deed  to  be  executed  on  that  day,  and  the  deed  is  not  then  executed, 
but  they,  nevertheless,  commence  their  business  as  partners,  they 
will  all  be  liable  for  the  acts  of  each,  whether  those  acts  occurred 
before  or  after  the  execution  of  the  deed.  For  the  question  in  such 
a  case  is  not,  when  was  the  deed  executed,  but  rather  this,  when  did 
the  partners  commence  to  carry  on  business  as  such.  The  agency 
begins  from  that  time,  whether  they  choose  to  execute  any  partner- 

205  Irwin  v.  Bidwell,  72  Pa.  St.  244;  Brink  v.  Insurance  Co.,  5  Rob.  <N.  Y.) 
104;  Davia  v.  Evans,  39  Vt.  182;  Edmundson  t.  Thompson,  2  Fost-  &  F.  564. 
Gabriel  v.  Evill,  9  Mees.  &  W.  297. 


§    111)  INCOMING    PARTNER.  251 

ship  deed  or  not.^*'^  ^Miere  there  is  an  agreement  for  a  partner- 
ship, and  there  is  nothing  to  lead  to  the  conclusion  that  the  partner- 
ship was  intended  to  commence  at  any  other  time,  it  will  be  held 
to  commence  from  the  date  of  the  agreement. ^"^ 

Acts  of  One  not  Yet  a  Partner. 

The  agency  of  each  partner  commencing  with  the  partnership, 
and  not  before,  it  follows  that  the  firm  is  not  liable  for  what  may  be 
done  by  any  partner  before  he  becomes  a  member  thereof.  So  that,y 
if  several  persons  agree  to  become  partners,  Jind  to  contribute  each 
a  certain  quantity  of  money  or  goods  for  the  joint  benefit  of  all. 
each  one  is  solely  responsible  to  those  who  may  have  supplied  him 
with  the  money  or  goods  agreed  to  be  contributed  by  him ;  ^^'^  and  the 
fact  that  the  money  or  goods  so  supplied  have  been  brought  in  by 
him  as  agreed  will  not  render  the  firm  liable.^"* 

SAME— INCOMING  PARTNEB. 

111.  An  incoming  partner  is  not  liable  for  previous   debts 
and  engagements  of  the  old  firm,  except 
EXCEPTION— Where  he  assumes  them. 

As  the  firm  is  not  liable  for  what  is  done  by  its  members  before 
the  partnership  between  them  commences,  so,  upon  the  very  same 
principle,  a  person  who  is  admitted  as  a  partner  into  an  existing 
firm  does  not,  by  his  entry,  become  liable  to  the  creditors  of  the 
firm  for  anything  done  before  he  became  a  partner.^^"  Each  part- 
ner is,  it  is  true,  the  agent  of  the  firm;  but,  as  before  pointed  out. 
the  firm  is  not  distinguishable  from  the  persons  from  time  to  time 
composing  it;  and,  when  a  new  member  is  admitted,  he  becomes  one 
of  the  firm  for  the  future,  but  not  as  from  the  past,  and  his  present 
connection  with  the  firm  is  no  evidence  that  he  ever  expressly  or  im- 
pliedly authorized  what  may  have  been  done  prior  to  his  admis- 
sion.    It  may  perhaps  be  said  that  his  entry  amounts  to  a  ratifica- 

208  Lindl.  Partn.  202. 

20  7  Williams  v.  Jones.  5  Barn.  &  C.  108. 

208  See  ante,  pp.  229,232.  And  cf.  Heap  v.  Dobson,  15  C.  B.  (N.  S.i  4C,ii.  Smith  v. 
Craven.  1  Cromp.  &  J.  500. 

209  Brooke  v.  Evans,  5  Watts  (Pa.)  196;  Heap  y.  Dobson,  15  C.  B.  (N.  S.)  4tJ0. 

210  Mc'I'jir  V.  Lawyer,  55  111.  App    ^79. 


252  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

tion  by  him  of  what  his  now  partners  may  have  done  before  he 
joined  them."^  But  it  must  be  borne  in  mind  that  no  person  can 
be  rendered  liable  for  the  act  of  another  on  the  ground  that  he  has 
ratified,  confirmed,  or  adopted  it,  unless,  at  the  time  the  act  was 
done,  it  was  done  on  his  behalf.'^^* 

112.  ASSUMPTION  OF  DEBTS— The  law  as  to  the  liabil- 

ity of  an  incoming  partner  where  there  has  been 
an  assumption  of  debts  is  in  a  very  unsettled  con- 
dition. 

113.  In  some  jurisdictions  the  incoming  partner  is  not  lia- 

ble to  creditors  unless  the  creditors  are  parties  to 
the  agreement  by  w^hich  the  debts  are  assumed. 

114.  In  other  jurisdictions  the  incoming  partner  is  held  lia- 

ble to  creditors  although  they  were  not  parties  to 
the  agreement  assuming  their  debts,  on  the  theory 
that  the  contract  was  made  for  their  benefit.  The 
precise  limits  of  this  doctrine  are  unsettled. 

There  is  a  good  deal  of  confusion  and  conflict  in  the  decisions  upon 
the  liability  of  an  incoming  partner  under  an  agreement  to  tissume 
debts.*  Of  course,  such  an  agreement  is  valid,  and  may  be  enforced 
by  any  one  who  is  a  party  to  it.  The  conflict  is  as  to  whether  or 
not  such  an  agreement  confers  any  rights  upon  a  creditor  who  is 
not  a  party  thereto.  The  cases  may  therefore  be  roughly  divided 
into  two  classes:  (1)  Those  which  hold  that  a  creditor  cannot  main- 
tain an  action  against  the  incoming  partner  on  his  agreement  to 
assume  debts,  and  (2)  those  which  hold  that  under  certain  circum- 

211  Gould,  J.,  in  Horsley  v.  Bell,  1  Brown,  Ch.  101,  note. 

212  Hughes  V.  Gross  (Mass.)  43  N.  E.  1031;  Wilson  v.  Tumman,  6  Man.  &  G. 
236. 

•  A  parol  contract  by  an  Incoming  partner  to  assume,  along  with  the  other 
member,  the  debts  of  the  old  concern,  is  binding.  J.  &  H.  Clasgens  Co.  v.  Silber 
(Wis.)  67  N.  W.  1122.  Where  one  member  of  an  insolvent  firm  sells  his  interest 
with  the  agreement  that  the  new  firm  shall  assume  the  debts  of  the  old,  the 
assets  of  the  new  firm  are  charged  in  equity  with  a  trust  for  the  payment  of  the 
debts  of  the  old,  which  may  be  enforced  by  a  creditor  of  the  old  firm  who  has  not 
consented  to  accept  the  new  firm  as  his  creditor  instead  of  the  old.  Pinney  an(f 
Newman,  JJ.,  dissenting.    Thayer  v.  Humphrey,  91  Wis.  276,  64  N.  W.  1007. 


§§    112-114)  ASSUMPTION    OP    DEBTS.  253 

stances  he  may  maintain  an  action  on  the  contract,  it  being  made  for 
his  benefit.      Each  will  be  considered  in  turn. 

In  jurisdictions  where  the  doctrine  that  a  third  person  can  main- 
tain an  action  on  a  contract  made  for  his  benefit,  although  he  is 
not  a  party  to  it,  does  not  prevail,-^ ^  a  creditor  who  is  not  a  party 
to  the  arrangement  cannot,  of  course,  maintain  an  action  against 
an  incoming  partner  upon  the  latter's  agreement  to  assume  the 
debts  of  the  old  firm.  This  is  the  view  taJven  in  England.  It  is 
clearly  stated  by  Lindley,*^*  as  follows:  "If  an  incoming  partner 
chooses  to  make  himself  liable  for  the  debts  incurred  by  the  firm 
prior  to  his  admission  therein,  there  is  nothing  to  prevent  his  so  do- 
ing. But  it  must  be  borne  in  mind  that,  even  if  an  incoming  part- 
ner agrees  with  his  co-partners  that  the  debts  of  the  old  shall  be 
taken  by  the  new  firm,  this,  although  valid  and  binding  between 
the  partners,  is,  as  regards  strangers,  res  inter  alios  acta,  and  does 
not  confer  upon  them  any  right  to  fix  the  old  debts  on  the  new 
partner.^^'  In  order  to  render  an  incoming  partner  liable  to  the 
creditors  of  the  old  finn,  there  must  be  some  agreement,  express 
or  tacit,  to  that  effect,  entered  into  between  him  and  the  creditors, 
and  founded  on  some  sufficient  consideration.  If  there  be  any  such 
agreement,  the  incoming  partner  will  be  bound  by  it,  but  his  liabili- 
ties in  respect  of  the  old  debts  will  attach  by  virtue  of  the  new  agree- 
ment, and  not  by  reason  of  his  having  become  a  partner.  An  agree- 
ment by  an  incoming  partner  to  make  himself  liable  to  creditors  for 
debts  owing  to  them  before  he  joined  the  firm  may  be.  and  in  prac- 
/'tice  generally  is,  established  by  indirect  evidence.  The  courts,  it 
has  been  said,  lean  in  favor  of  such  an  agreement,  and  are  ready 
to  infer  it  from  slight  circumstances;'^'  and  they  seem  formerly 
to  have  inferred  it  whenever  the  incoming  partner  agreed  with  the 
other  partners  to  treat  such  debts  as  those  of  the  new  firm.^^^ 

218  Clark,  Cont.  513.  »i*  Partn.  208. 

210  See  per  Parke,  J.,  in  Vere  ▼.  Ashby,  10  Barn.  &  C.  288;  Ex  parte  Peele, 
6  Ves.  602;  Ex  parte  Williams,,  Buck,  13. 

216  Ex  parte  Jackson,  1  Ves.  Jr.  131;  Ex  parte  Peele,  6  Ves.  602.    See,  also, 
Rolfe  V.  Flower,  L.  R.  1  P.  C.  27. 

217  See  Cooke.  Bankr.  Laws  (Sth  Ed.)  534;   Ex  parte  Clowes,  2  Brown,  Ch.  595, 
citing  Ex  parte  Bingham. 


254  RIGHTS    AND    LIABILITIES    A3    TO    THIKD    PERSONS.  (Ch.  G 

But  this  certainly  is  not  enough,  for  the  agreement  to  be  proved  is 
an  agreement  with  the  creditor;  and  of  such  an  agreement  an  ar- 
rangement between  the  partners  is  of  itself  no  evidence."  "' 

This  view  has  been  taken  in  many  American  cases.  Thus,  in 
Shoemaker  Piano  Manuf'g  Co.  v.  Bernard,"'  it  was  said:  "The  rule 
stands  upon  the  principle  of  assent  by  the  party  to  be  charged,  and 
consent  of  the  creditor  to  accept  the  new  liability."  In  Parmalee 
V.  Wiggenhorn,"°  the  following  language  was  used:  "An  incoming 
partner  is  not  liable  for  the  debts  incurred  or  contracts  made  before 
he  entered  the  partnership,  unless  such  liability  is  created  by  express 
contract,  based  on  good  consideration.  There  must  be  a  novation 
before  the  new  firm  is  liable;  and  the  new  contract  must  receive  the 
consent  of  all  the  parties,  aJid  must  have  the  effect  to  extinguish  the 
old  contract,  and  create  a  new  liability  of  debtor  and  creditor,  or 
of  contractors,  between  the  creditor  or  contractor  and  the  new  firm, 
and  such  new  contract  must  be  based  on  some  consideration." 

In  many  of  the  United  States  the  anomalous  doctrine  has  been 
established  that  a  person  not  a  party  to  a  contract  can  maintain 
an  action  thereon  where  it  was  made  for  his  benefit."'  The  appli- 
cation of  this  doctrine  to  cases  where  an  incoming  partner  has 
agreed  with  his  co-i)artners  to  assume  debts  of  the  old  firm  has  re- 
sulted in  great  confusion  and  conflict.  It  may  clarify  the  subject 
somewhat  to  consider  it  with  reference  to  the  form  of  the  contract 
by  which  the  debts  are  assumed.  The  contract  usually  takes  one 
of  three  forms: 

(1)  The  parties  may  agree  that  the  incoming  partner  shall  pay 
a  certain  proportion  of  the  debts  of  the  old  firm.  It  seems  clear 
that,  when  the  agreement  takes  this  shape,  no  creditor  of  the  old 
llrm  can  maintain  an  action  on  his  debt  against  the  incoming  part- 
ner, either  jointly  nith  his  co-partners  or  separately.  Such  a  con- 
tract can  be  enforced  against  him  only  by  his  copartners  with  whom 
it  was  made.  This  is  for  the  reason  that  no  one  creditor  can  show 
from  the  contract  that  it  was  intended  for  his  benefit,  or  covers  any 

ai«  Ex  parte  Peele,  6  Ves.  602;  Ex  parte  Parker,  2  Mont.,  D.  &  D.  611.    See, 
also,  Ex  parte  Freeman,  Buck,  471;    Elx  parte  Williams,  Id.  13. 
2 1*  2  Lea  (Teuu.)  HoS.  220  6  Neb.  322.  221  Clark,  Cont.  513. 


§§    11--114)  ASSUMPTION    OF    DEBTS.  255 

part  of  his  debt.  In  a  leading  case  in  New  York  "=^  where  this 
distinction  was  talien,  the  court  said:  "The  plaintiffs  agreed  to  pay 
one-quarter  of  the  firm's  indebtedness.  If  the  next  day  they  had 
ascertained  its  entire  amount,  and  paid  over  to  Stotenburgh,  Root 
&  Co.  one-quarter  of  that  total,  their  contract  would  have  been  ful- 
filled. They  would  have  put  back  into  the  firm  assets,  precisely 
what  they  had  agreed  to  give  for  what  was  taken  out.  Or  if,  again, 
there  were  ten  creditors,  all  of  whose  debts  were  due,  and  one  of 
them  held  one-quarter  of  the  total,  the  plaintiffs  might  pay  him, 
and  owe  nothing  to  the  other  nine,  or  pay  a  part  of  the  nine,  and 
owt*  nothing  to  the  rest.  In  other  words,  no  one  nor  any  specific 
and  identical  creditor  could  so  show,  in  advance  of  payment,  that 
the  promise  was  intended  for  his  benefit,  or  covered  any  pai't  of  his 
debt,  as  to  establish  that  he  could  maintain  an  action  on  such  prom- 
ise. "VMiether  it  would  benefit  him  or  not  depended  wholly  upon 
the  undisclosed  option  of  the  plaintiffs  down  to  the  moment  at 
which  they  were  required  to  pay  'one-quarter  of  the  indebtedness' 
of  the  firm.  It  would  be  a  very  great  extension  of  the  doctrine  of 
Lawrence  v.  Fox  ^^^  to  give  a  right  of  action  to  a  creditor  for  whose 
benefit  the  promise  might  or  might  not  have  been  made."  Of 
course,  the  same  objection  would  apply  to  an  action  against  the 
members  of  the  new  firm  where  the  agreement  was  that  the  new 
firm,  instead  of  the  new  partner,  should  assume  a  certain  proportion 
of  the  debts  of  the  old  firm. 

(2)  The  parties  may  agree  that  certain  specific  debts  shall  be  paid 
by  the  incoming  partner  or  by  the  new  firm.  It  seems  clear  that, 
when  the  agreement  takes  this  shape,  the  creditor  specified  ought  to 
be  allowed  to  maintain  an  action  against  the  incoming  partner  or 
the  members  of  the  new  firm,  as  the  case  may  be,  if  the  doctrine  that 
a  third  person  may  sue  on  a  contract  made  for  his  benefit  is  to  have 
any  application  at  all.  Thus,  in  Arnold  v.  Nichols,^^*  it  was  held 
that  where  one  engaged  in  business  enters  into  a  co-partnership  with 
another  for  the  purpose  of  continuing  the  business,  and  transfers 
its  assets  to  the  firm  in  consideration  of  an  agreement  of  the  firm  to 

2  22  Wheat  T.  Rice,  97  N.  Y.  296,  followed  in  Serviss  v.  McDonnell,  107  N.  Y. 
2G0,  14  N.  E.  314. 

223  20  N.  Y.  268;    Bnchanan  t.  Tilden  (Sup.)  39  N.  Y.  Supp.  228. 
2  24  G4  N.  Y.  117,  distinguishing  Merrill  v.  Green,  55  N.  Y.  270. 


256  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    I'KUSOXS.  (Ch.  6 

assume  and  pav  certain  specified  debts  incurred  in  the  business,  and 
to  apply  the  assets  first  to  the  payment  of  said  debts,  the  agreement 
is  to  be  deemed  as  made  for  the  benefit  of  the  creditors  holding  the 
clainis  specified,  and  an  action  may  be  maintained  by  such  a  creditor 
against  the  firm  upon  such  agreement. 

(3)  The  parties  may  agree  that  all  of  the  debts  of  the  old  firm  shall 
be  paid  by  the  new  firm  or  by  the  incoming  partner.  This  form  of 
contract  is  more  definite  than  the  first  fonn  considered,  where  the 
agreement  was  simply  to  pay  a  given  proportion  of  the  debts.  Here 
each  and  every  creditor  can  say  that  the  contract  was  made  for  his 
benefit.  There  no  creditor  could  say  that  it  was  for  his  benefit.  It 
seems,  therefore,  that  the  same  reasons  that  would  support  an  action 
where  the  contract  was  to  pay  a  specific  debt  would  support  an  ac- 
tion where  the  agreement  was  to  pay  all  the  debts  of  the  old  firm. 
In  Barlow  v.  Myers  '^^  the  defendant  promised  a  firm  to  pay  all  its 
debts,  without  specification  of  the  particular  debts,  or  naming  the 
creditors  of  the  firm,  and  the  holder  of  a  promissory  note  of  the  firm 
was  allowed  to  maintain  an  action  against  the  defendant  alone  on 
such  promise. 

It  is  not  claimed  that  all  the  cases  will  harmonize  with  these  con- 
clusions, but  it  is  believed  that  most  of  them  will,  and  it  is  submitted 
that  they  rest  on  sound  reasoning.  Much  of  the  confusion  in  this 
subject  will  be  found  to  be  rather  in  the  language  of  the  opinion  than 
in  the  decision  of  the  case.  Thus,  in  Serviss  v.  McDonnell,'*'  in  one 
part  of  the  opinion  the  court  said:  "An  incoming  partner  is  not, 
as  of  course,  liable  for  the  debts  of  the  firm.  *  *  *  He  may  be- 
come liable  by  agreement;  but  an  undertaking  on  his  part  alone,  or 
in  connection  with  others,  that  the  new  firm  will  pay  the  debts  of 
the  old  firm,  can  be  enforced  only  by  the  old  firm,  and  the  creditors 
could  not  sue  for  the  breach  of  it."  The  decision  of  the  case,  how- 
ever, was  rested  upon  the  distinction  taken  in  Wheat  v.  Rice,'*^  that 
the  agreement  was  to  pay  only  a  certain  portion  of  the  liabilities  of 
the  firm.     Wheat  v.  Rice  was  regarded  as  controlling. 

225  64  X.  Y.  41.  2  26  107  N.  Y.  2G0,  14  N.  E.  314. 

22T  97  N.  Y.  29C>.  The  opposite  doctrine  is  sometimes  laid  down  in  terms  equally 
broad,  and  equally  inexact.  See  Hoile  v.  Bailey,  58  Wis.  434,  17  N.  W.  322; 
J.  &  H.  Clasgena  Co.  t.  Silber  (Wis.)  67  N.  W.  1122. 


§    116)  TERMINATION    OF    LIABILITY.  257 

TERMINATION  OF  LIABILITY. 

116.  The  termination  of  a  partner's  liability  will  be  consid- 
ered, as  to 

(a)  Future  acts  (p.  257), 

(b)  Past  acts  (p.  265). 

SAME— FUTURE  ACTS, 

116.  The  liability  of  a  partner  for  future  acts  of  his  co-part- 
ners is  terminated 

(a)  By  dissolution  of  the  firm  by  operation  of  la-w  (p.  257). 

(b)  By  dissolution  of  the  firm  by  act  of  the  partners  (p.  259), 

provided  there  is  also 

(1)  Actual  notice  to  former  creditors  known  to  the 

firm  (p.  261). 

(2)  Notice  by  publication  to  other  persons  (p.  264). 

Dissolution  hy  Operation  of  Law. 

When  a  fiim  is  dissolved  *'•  by  operation  of  law,  as  by  the  death  "* 
or  bankruptcy  of  a  partner,^'"'  marriage  of  a  feme  sole  pai-tuer,^-'* 
or  war  between  the  countries  to  which  the  partners  belong,^ ^^  the 
liability  of  each  partner  for  the  future  acts  of  his  co-partners  is  termi- 
nated by  that  fact,  without  more."* 

Efect  of  Death. 

When  a  partner  dies,  notice  of  death  is  not  requisite  to  prevent 
liability  from  attaching  to  the  estate  of  a  deceased  partner,  in  re- 
spect of  what  may  be  done  by  his  co-partners  after  his  decease, 

228  See  post,  p.  393. 

22  9  Washburn  v.  Goodman,  17  Pick.  (Mass.)  519. 

23  0  See  post,  p.  399. 

231  Bassett  v.  Shepardson,  52  Mich.  3,  17  N.  W.  217. 

2  32  See  post,  p.  402.  ; 

««8  If  a  partner  becomes  lunatic,  and  his  lunacy  is  not  apparent  or  made  known, 
his  power  to  bind  the  firm  and  his  liability  for  the  acts  of  his  co-partners  will  re- 
main unaffected.  2  Lindl.  Partn.  213.  But  an  inquisition  of  lunacy  found  as  to 
one  partner,  ipso  facto,  dissolTes  the  jjmxtnership.  Isler  T.  Baker,  6  Humph. 
(Tenn.)  85. 

GEO. PART,— 17 


258  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Cil.    6 

for  the  authority  of  an  agent  is  determined  by  the  death  of  his 
principal,  whether  the  fact  of  death  is  known  or  not.-^*  The  death 
of  one  partner  does  not,  however,  determine  an  authority  given  by 
the  firm  through  him  before  his  death;  and  consequently,  if  after 
his  death  such  an  authority  is  acted  on,  the  surviving  partners  will 
be  liable  for  it.^^^  But  it  does  not  follow  that,  because  a  creditor 
has  no  remedy  against  the  estate  of  a  deceased  partner  in  respect 
of  debts  contracted  by  his  co-partners  since  his  death,  his  estate  is 
not  liable  to  contribute  to  such  debts  at  the  suit  of  the  surviving 
partners.  That  is  a  different  matter  altogether,  and  depends  on 
the  agreement  into  which  he  entered  with  his  co-partners,  as  will 
be  seen  hereafter  when  the  subject  of  dissolution  is  under  con- 
sideration.''*" 

Same — Executor  Continuvng  Business. 

If  an  executor  of  a  deceased  partner  carries  on  the  partnership 
business  pursuant  to  directions  contained  in  the  will  of  his  testator, 
the  executor  will  reader  himself  personally  liable  for  debts  con- 
tracted in  so  doing,  but  he  will  be  entitled  to  indemnity  in  respect 
thereof  out  of  the  estate  of  the  deceased;  ^^^  and  consequently,  if 
a  deceased  partner  has  himself  directed  his  assets  or  any  part  there- 
of to  Im'  t-ii;j)l(;_v('d  in  i;ti-i-yiiif!;  on  llic  iiarinui-ship  bat-iue-ss;,  :-o  nr.icli 
of  them  as  are  directed  to  be  employed  are  liable  to  make  good  the 
debts  contracted  during  their  employment.  For  these  reasons,  and 
to  this  extent,  therefore,  his  estate  will  be  applicable  to  the  liquida- 
tion of  the  demands  of  those  who  have  become  creditors  of  the  part- 
nership after  his  decease.^'" 

284  Scholefield  v.  Eichelberger,  7  Pet.  586;  Dickinson  v.  Dickinson,  25  Grat. 
(Va.)  321;  Roberts  v.  Kelsey,  38  Midi.  602;  Marlett  v.  Jackman,  3  Allen  (Mass.) 
287;  Hoard  v.  Clum,  31  Minn.  186,  17  N.  W.  275.  Liability  for  existing  obligation 
is  not  terminated  by  death.  Lane  v.  Williams,  2  Vem.  292.  However,  if  a  part- 
ner is  executor  of  the  estate  of  a  deceased  co-partner,  the  fact  of  the  death  should 
be  given  out,  lest  that  estate  be  made  liable  for  transactions  of  the  continuing  firm. 
Vulliamy  v.  Noble,  3  Mer.  593. 

23B  Bank  of  New  York  v.  Yanderhorst,  32  N.  Y.  553;  Usher  v.  Dauncey,  4 
Camp.  97. 

83  6  Post,  p.  415. 

287  Wild  V.  Davenport,  48  N.  J.  Law,  129,  7  Atl.  295;  Labouchere  v.  Tupper, 
11  Moore,  P.  C.  198. 

288  Jones  T.  Walker,  103  D.  S.  444;  Burwell  r.  Cawood,  2  How.  560;  Cook  t. 


§    ]  IG)  TERMINATION    OF    LIABILITY.  259 

Dissolution  hy  Act  of  Partners. 

Subject  to  two  exceptions,  which  will  be  examined  hereafter,  no- 
tice of  dissolution  of  a  firm  or  the  retirement  of  a  partner  duly 
given  determines  the  power  previously  possessed  by  each  partner 
to  bind  the  others.  Hence,  after  the  dissolution  of  a  firm  or  the 
retirement  of  a  member,  and  notification  of  the  fact,  no  member 
of  the  previously  existing  firm  is,  by  virtue  of  his  connection  there- 
with, liable  for  goods  supplied  to  any  of  his  late  partners  subse- 
quently to  the  notification; ""  nor  is  he  liable  on  bills  or  notes  sub- 
sequently drawn,  accepted,  or  indorsed  by  any  of  them  in  the  name 
of  the  late  tirm,=^*»  even  although  they  may  have  been  dated  before 
the  dissolution, 2"  or  have  been  given  for  a  debt  previously  owing 
from  the  firm  by  the  partner  expressly  authorized  to  get  in  and  dis- 
charge its  debts.  The  exceptions  alluded  to  above  as  qualifying 
the  rule  that  the  agency  of  each  partner  is  determined  by  dissolu- 
tion (or  retirement)  and  notice  are:  First,  where  a  partner  who  has 
retired,  and  notified  his  retirement,  nevertheless  continues  to  hold 
himself  out  as  a  partner;  and,  secondly,  where  what  is  done  only 
carries  out  what  was  begun  before.  If  a  partner  retires,  and  gives 
notice  of  his  retirement,  and  he,  nevertheless,  allows  his  name  to 
be  used  as  if  he  were  still  a  partner,  he  will  continue  to  incur  lia- 
bility on  the  principle  of  holding  out,  explained  in  an  earlier  part  of 

Rogers,  3  Fed.  69;  Lucht  v.  Behrens,  28  Ohio  St  231;  Wild  v.  Daveni>ort,  48  N. 
,1.  Law,  129,  7  Atl.  295.  A  testator  may  provide  that  hi8  capital  and  interest  in  a 
[)artnership  shall  be  continued  therein  after  his  death,  but  that  his  other  property 
shall  not  be  chargeable  to  partnership  debts  subsequently  incurred.  Jones  v. 
Walker,   103   U.   S.   144. 

239  Schlater  v.  Winpenny,  75  Pa.  St.  321;  Minnit  v.  Whinery,  5  Brown,  ParL 
Cas.  489.  A  partner  is  not,  by  retiring  from  the  firm,  relieved  from  liability  for 
services  rendered  thereafter  under  a  contract  made  before  such  retirement,  though 
the  services  were  rendered  with  knowledge  that  such  partner  had  retired.  Mer- 
rill V.  Blauchard,  7  App.  Div.  167,  40  N.  Y.  Supp.  48. 

240  Abel  V.  Sutton,  3  Esp.  108;  Spenceley  v.  Greenwood,  1  Fost.  &  F.  297.  The 
mere  fact  that  money  loaned  to  members  of  a  firm  after  another  member's  retire- 
ment, for  which  they  gave  a  note  in  the  firm  name,  was  used  in  paying  debts  con- 
tracted prior  to  the  retirement,  did  not  render  the  retiring  partner  liable  on  the 
note.    Askew  v.  Silman,  95  Ga.  678,  22  S.  E.  573. 

241  Wright  T.  Pulham,  2  Chit.  121;  s.  c,  sub.  nom.  Wrightson  v.  Pullan,  1 
Starkie,  375. 


260  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

this  book,^**  But  if  a  partner  retires,  and  notice  of  his  retire- 
ment is  given,  he  will  not  continue  to  incur  liability  by  the  acts  of 
his  co-partners,  simply  because  they  continue  to  carry  on  business 
in  the  old  name,  and  he  does  not  take  steps  to  stop  them.*  His 
forbearance  in  this  respect  does  not  necessarily  amount  to  an  au- 
thority to  use  his  name  as  before;  and,  unless  his  name  is  used  by 
his  authority,  he  is  not  liable  on  the  ground  that  he  holds  himself 
out  as  a  partner.^*'  So,  notwithstanding  dissolution,  a  partner 
has  implied  authority  to  bind  the  firm  so  far  as  may  be  necessary  to 

242  Ante,  p.  80.  Where  a  change  takes  place  in  a  firm  by  the  retirement  of 
Bome  of  its  members,  and  the  same  firm  name  is  used  after  such  retirement,  the 
retiring  members  can  only  relieve  themselves  from  liability  for  the  future  transac- 
tions of  the  firm  by  giving  actual  notice  of  such  retirement  to  former  customers 
who  continue  to  deal  with  the  firm.  As  to  these,  the  old  partnership  is  presumed 
to  continue  the  same  as  it  was  when  they  commenced  to  deal  with  it,  until  in 
some  way  they  have  actual  notice  of  the  change.  Graham  v.  Hope,  Peake,  154; 
Page  V.  Brant,  18  111.  37;  Holtgreve  v.  Wintker,  85  111.  470;  Stall  v.  Cassady. 
57  Ind.  284;  Tudor  v.  White,  27  Tex.  584;  Davis  v.  Willis,  47  Tex,  154;  Dickin- 
son v.  Dickinson,  25  Grat.  (Va.)  321;  Little  v.  Clarke,  36  Pa.  St.  114;  Kenney  v. 
Altvater,  77  Pa.  St.  34;  Carmichael  v.  Greer,  55  Ga.  116;  Holland  v.  Long,  57 
Ga.  36;  Ennis  v.  Williams,  30  Ga.  691;  Stewart  v.  Sanneborn,  51  Ala.  126;  Shara- 
burg  V.  Ruggles,  83  Pa.  St.  148;  Vernon  v.  Manhattan  Co.,  17  Wend.  (N.  Y.) 
524;  Austin  v.  Holland,  69  N.  Y.  571;  Bank  of  Commonwealth  v.  Mudgett,  44 
N.  Y.  514;  Polk  v.  Oliver,  56  Miss.  566;  Lowe  v.  Penny,  7  La,  Ann.  356;  Den- 
man  V.  Dosson,  19  La.  Ann,  9;  Pope  v.  Risley,  23  Mo.  185;  Johnson  v,  Totten, 
3  Cal.  343;  Williams  v.  Bowers,  15  Cal.  321;  Deering  v.  Flanders,  49  N.  H.  225; 
Zollar  V.  Janvrin,  47  N.  H.  324;  Scheiffolin  v.  Stevens,  1  Winst,  Law  (N,  C) 
106;  White  v.  Murphy,  3  Rich,  Law  (S.  C.)  309;  Hutchins  v.  Hudson,  8  Humph. 
(Tenn.)  426;  Kirkman  v.  Snodgrass,  3  Head  (Tenn.)  370;  Prentiss  v,  Sinclair,  5 
Vt.  149;  Moline  Wagon  Co.  v.  Kummell,  12  Fed.  658;  Benjamin  v.  Covert,  47 
Wis,  375,  2  N.  W,  625.  And  see  First  Commercial  Bank  v.  Talbert,  103  Mich. 
625,  61  N.  W.  888. 

*  Freeman  v.  Falconer,  44  N.  Y.  Super.  Ct.  132;  Howe  v.  Thayer,  17  Pick. 
(Mass.)  91;  Ellis  v.  Bronson,  40  111.  455.  But  see  Newsome  v.  Coles,  2  Camp. 
617.  Evidence  that  before  a  sale  to  a  firm  one  of  the  partners  had  withdrawn, 
and  his  brother  had  taken  his  place,  is  insufficient  to  relieve  the  withdrawing  part- 
ner from  liability,  where  the  name  of  the  firm  continued  the  same,  and  no  notice 
was  given  of  the  withdrawal,  though  defendant  alleged  that  notice  was  given  to 
plaintiff's  agent,  which  the  latter  denied.    Kerr  v.  Franks  (Ky.)  30  S.  W.  1012. 

243  Lindl,  Partn.  217;  Webster  v.  Webster,  3  Swanst.  490,  note;  Newsome  v. 
Coles,  2  Camp.  617. 


§    116)  TERMINATION   OF    LIABILIT1.  2G1 

settle  and  liquidate  existing  demands,  and  to  complete  transactions 
begun,  but  unfinished,  at  the  time  of  the  dissolution.^**  But  a 
partner,  after  dissolution,  has  no  implied  power  to  bind  his  former 
partners  by  an  acknowledgment  to  revive  a  liability  already  barred 
by  the  statute  of  limitations.**"  The  cases  are  in  conflict  as  to 
whether  a  partner  in  such  case  has  power  to  extend  the  time  under 
the  statute  as  to  a  debt  not  yet  barred  by  payment  for  an  acknowl- 
edgment.**' It  is  established  that  a  surviving  partner  does  not 
have  this  power.'*^ 
WJw  Entitled  to  AcPiial  Notice. 

All  persons  are  entitled  to  actual  notice  of  the  dissolution  of  a 
firm  or  the  retirement  of  a  partner  who  have  previously  given  credit 
to  the  firm  in  money,  goods,  op  services.**®  The  dealing,  however, 
must  be  with  the  firm,  for  there  is  no  obligation  to  give  actual  no- 
tice to  persons  who  may  have  relied  upon  the  credit  of  the  firm  with- 

2  44  Murray  v.  Mumford,  6  Cow.  (N.  Y.)  441;  Thursby  v.  Lidgerwood,  69  N. 
r.  198;  Moist's  Appeal,  74  Pa.  St.  166;  Yale  t.  Eames,  1  Mete.  (Mass.)  486; 
Tutt  V.  Clorey,  62  Mo.  116. 

246  Bloodgood  V.  Bruen,  8  N.  Y.  362;  Whitney  v.  Reese,  11  Minn.  138  (Gil.  87): 
Bell  V.  Morrison,  1  Pet.  351. 

246  That  no  such  power  exists  is  held  in  Cronkhite  t.  Herrin,  15  Fed.  888; 
Gates  V.  Fisli,  45  Mich.  522,  8  N.  W.  558;  Sigler  v.  Piatt,  16  Mich.  206;  Wilson 
T.  Waugh,  101  Pa.  St.  233;  Watson  v.  Woodman,  L.  R.  20  Eq,  721;  Shoemaker 
V.  Benedict,  11  N.  Y.  176;  Carlton  v.  Coffin,  27  Vt.  496.  Contra,  McClurg  v. 
Howard,  45  Mo.  365;  Merritt  v.  Day,  38  N.  J.  Law,  32;  Wood  v.  Barber,  90  N. 
C.  76;  Sbelton  v.  Cocke,  3  Munf.  (Va.)  191. 

24T  Bloodgood  V.  Bruen,  8  N.  Y.  362;  Espy  v.  Comer,  76  Ala.  501;  Brown  v. 
Gordon,  16  Beav.  302. 

24  8  Dundas  v.  Gallagher,  4  Pa.  St.  205;  Howell  v.  Adams,  68  N.  Y.  314;  Stah 
T.  Cassady,  57  Ind.  284;  Bloch  v.  Price,  32  Fed.  562;  Meyer  v.  Krohn.  114  111. 
574,  2  N.  E.  495;  Stimson  v.  Whitney,  130  Mass.  591;  Clement  v.  Clement,  69 
Wis.  509,  35  N.  W.  17;  Mulford  v.  Griffin,  1  Post.  &  F.  145;  Faldo  v.  Griffin,  Id. 
147;  Parkin  v.  Carruthers,  3  Esp.  248;  Williams  v.  Keats,  2  Starkie,  290;  Brown 
V.  Leonard,  2  Chit.  120;  Dolman  t.  Orchard,  2  Car.  «&  P.  104;  Tabb  v.  Gist,  1 
Brock.  33,  Fed.  Cas,  No.  13,719;  Bradley  v.  Camp,  Kirb.  (Conn.)  77;  Southwick 
T.  McGovern,  28  Iowa,  533;  Kennedy  v.  Bohannon,  11  B.  Mon.  (Ky.)  118;  Ami- 
down  V.  Osgood,  24  Vt,  278;  Lamb  v.  Singleton,  2  Brev.  (S.  C)  490;  Heroy  v 
Van  Pelt,  4  Bosw,  (N.  Y.)  60;  Schorten  v.  Davis,  21  La.  Ann.  173;  Dickinson  v 
Dickinson,  25  Grat.  (Va.)  321;  Southern  v.  Grim.  67  111.  106;  Buffalo  City  Bank 
T.  Howard,  35  N.  Y.  500;  Hunt  v.  Hall,  8  Ind.  215;  Newcomet  v.  Brotzman,  69 
Pa.  St.  185;  Gardner  v.  Towsey,  3  Litt.  (Ky.)  423;   Merritt  v.  Pollys,  16  B.  Mon. 


262  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch,   G 

out  its  consent^^*^  Thus,  there  is  no  oblij^ation  to  give  notice  of 
dissolution  to  persons  ^ho  have,  without  the  knowledge  or  request 
of  the  firm,  dealt  in  or  discounted  its  commercial  paper.  ='''°  But  it 
is  well  established  that  actual  notice  must  be  given  persons  who 
have  loaned  money  to  the  firm,^"  or  who  have  sold  it  goods  on 
credit,2'5='  no  matter  how  small  the  amount  of  the  transaction,"^ 
but  not  to  those  who  have  merely  sold  goods  to  the  firm  for  cash."* 
An  agent  who  performs  services  for  a  firm  after  the  retirement  of 
a  partner  can  hold  that  partner,  when  he  had  no  notice  of  the 
change  in  the  firm,  as  where  he  is  employed  in  another  city."' 

Wfcat  is  Actual  Notice. 

As  against  persons  who  dealt  with  the  firm  before  any  change 
in  it  took  place,  an  advertisement  without  more  is  of  little  or  no 
value."'  But,  if  notice  in  point  of  fact  can  be  established,  it  mat- 
ters not  by  what  means;    for  it  has  never  been  held  that  any  par- 

(Ky.)  355;  Ketcham  v.  Clark,  6  .Johns.  (N.  Y.)  144;  (Jrady  t.  Robinson,  28  Ala. 
289;  Spears  v.  Toland,  1  A.  K.  Marsh.  (Ky.)  203;  Thurston  v.  Perkins,  7  Mo. 
29;  Princeton  «&  Kingston  T.  Co.  v.  Gulick,  16  N.  J.  Law,  IGl;  Bernard  v.  Tor- 
rance, 5  Gill  &  J.  (Md.)  383.  See,  however,  Brisban  v.  Boyd,  4  Paige  (N.  Y.)  17; 
Regester  v.  Dodge,  6  Fed.  6.  After  dissolution  and  notice  the  power  of  each  part- 
ner to  bind  the  others  ceases.  See  Cronly  v.  Bank,  18  B.  Mon.  (Ky.)  405;  White- 
sides  V.  Lee.  1  Scam.  (111.)  54S;  Lane  v.  Tyler,  49  Me.  252.  It  is  of  course  as- 
sumed, in  what  has  been  above  written,  that,  after  a  Orm  is  dissolved,  one  partner 
dealing  with  a  person  who  has  no  notice  of  the  dissolution  may  bind  his  co-partners 
only  in  transactions  in  the  usual  course  of  business.  Whitman  v.  Leonard,  3  Pick. 
(Mass.)  177. 

2  49  City  Bank  of  Brooklyn  v.  McChesney,  20  N.  Y.  241;  Vernon  t.  Manhattan 
Co.,  22  Wend.  (N.  Y.)  183;  ITutchins  v.  Bank,  8  Humph.  (Tenn.)  418. 

260  Id. 

261  Buffalo  City  Bank  v.  Howard,  35  N.  Y.  500;  Jansen  v.  Grimshaw.  26  111. 
App.  287.  Depositors  with  a  firm  of  bankers  come  within  this  class,  Howell  v. 
Adams,  68  N.  Y.  314;  as  do  also  factors  who  have  made  advances  to  a  firm,  Wil- 
liams V.  Birch,  6  Bosw.  (N.  Y.)  299. 

2  52  Clapp  V.  Rogers,  12  N.  Y.  283;  Amidown  v.  Osgood,  24  Vt.  278. 

2  63  Clapp  V.  Rogers,  12  N.  Y.  283. 

284  Merritt  v.  Williams,  17  Kan.  287;    Clapp  v.  Rogers,  12  N.  Y.  283. 

2  65  Austin  V.  Holland,  69  N.  Y.  571.    But  see  Costello  v.  Nixdorff,  9  Mo.  App. 

501. 

266  Watkinson  v.  Bank,  4  Whart.  (Pa.)  482;  Vernon  v.  Manhattan  Co.,  22  Wend. 
(N.  Y.)  183;  Zollar  v.  Janvrin,  47  N.  H.  324;  Gilchrist  v.  Brande,  58  Wis.  184, 
15  N.  W.  817;   Graham  v.  Hope,  1  Peake,  154. 


§116)  TERMINATION    OF    LIABILITY.  268 

ticular  formality  must  be  observed. ^"^^  If  an  old  customer  can  be 
shown  to  have  seen  an  advertisement,  that  will  be  sufficient;  and 
evidence  that  he  took  a  certain  paper  is  some  evidence  that  he 
knew  of  a  dissolution  advertised  therein."^'  Again,  general  noto- 
riety, a  change  in  the  name  of  the  firm,  and  advertisements,  coupled 
with  the  execution  of  powers  of  attorney  to  the  new  firm,  have  been 
held  to  warrant  the  jury  in  finding  knowledge  by  an  old  customer 
of  a  change  in  the  old  firm.^'^®  So,  in  the  case  of  bankers,  a  change 
in  the  name  of  the  firm  appearing  on  the  face  of  the  checks  used  by 
their  customers  has  been  held  sufficient  notice  to  an  old  customer 
who  had  drawn  checks  in  the  new  form.**" 

2  57  Le  Roy  v.  Johnson.  2  Pet.  (U.  S.)  186;  Roberts  v,  Spencer,  123  Mass.  397. 
It  makes  no  difference  how  notice  is  given,  so  that  actual  notice  of  a  change  in 
the  firm  is  brought  home  to  the  former  correspondents.  Holtgreve  v.  Wintlier, 
85  111.  471;  Solomon  v.  Hollander,  55  Mich.  256,  21  N,  W.  336.  But  see  Gilchrist 
V.  Brande,  58  Wis.  184.  15  N.  W.  817.  Notice  of  the  dissolution  may  be  shown 
either  by  direct  or  circumstantial  evidence  sulEcient  to  establish  the  fact  that 
the  person  seeking  to  enforce  the  partnership  liability  knew  of  the  dissolution. 
See  Laird  v.  Ivens,  46  Tex.  622;  Lovejoy  v.  Spafiford,  93  U.  S.  430;  Coddingtou 
V.  Hunt,  6  Hill  (N.  Y.)  595;  Mauldin  v.  Branch  Bank,  2  Ala.  502.  Circumstances 
such  as  leave  no  rational  doubt  in  the  mind  that  one  knew  of  the  dissolution 
are  as  satisfactory  as  direct  and  positive  proof.  Irby  v.  Vining,  2  McCord  (S.  C.) 
379.  Knowledge  of  any  facts,  however  acquired,  sutiicient  to  put  an  ordinarily 
prudent  man  upon  inquiry,  will  charge  one  knowing  such  facts  with  notice  of  what- 
ever other  facts  a  reasonable  investigation  would  have  disclosed.  See  Young  v. 
Tibbitts,  32  Wis.  79;  Ransom  v.  Lovless,  49  Ga.  471.  Evidence  that  plaintiffs 
were  subscribers  to,  and  received,  commercial  reports  which  reported  the  diaao- 
lation  of  a  firm,  is  competent,  as  tending  to  show  knowledge  of  the  dissolution. 
Homberger  v.  Alexander  (Utah)  40  Pac.  260. 

268  Rabe  V.  Wells,  3  Cal.  148;  Jenkins  v.  Blizard,  1  Starkie,  418;  Whitesides 
T.  Lee,  2  111.  550. 

2  89  Hart  V.  Alexander,  2  Mees.  &  W.  484.  But  see  Pitcher  v.  Barrows,  17 
Pick.  (Mass.)  361.  A  change  in  the  partnership  name  which  plainly  indicates 
the  withdrawal  of  a  partner  is  sufficient  notice  of  the  fact  of  such  withdrawal 
to  all  persons  to  whom  it  is  communicated,  but  a  change  in  the  name  which  does 
not  contain  such  communication  is  not  notice  of  the  withdrawal  of  any  partner. 
California:  Deering's  Civ.  Code  1886,  §  2454.  Dakota:  Civ.  Code  1883,  §  1437. 
North  Dakota:     Rev.  Code  1895,  §  4403. 

280  Barfoot  t.  Goodail,  3  Camp.  147. 


264  RIGHTS   AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.    6 

Notice  hy  Publication — Nondealers. 

Public  notice  of  the  retirement  of  a  partner  given  by  publication 
in  a  newspaper  published  at  the  place  where  the  business  of  the  firm 
is  carried  on  is  suflBcient,  not  only  against  all  who  can  be  shown  to 
have  seen  it,^*^  but  also  against  all  who  had  no  dealings  with  the 
old  firm,  whether  they  saw  it  or  not.^*"''  Nondealers  with  the  firm 
may  be  given  suflBcient  notice  by  a  change  in  the  firm  name  which 
shows  the  retirement  of  a  partner. ''"'  In  some  cases  notoriety  of 
the  change  in  the  firm  has  been  held  equivalent  to  published  no- 
tice.^'* Notice  is,  of  course,  unnecessary  when  actual  knowledge 
is  shown  in  any  way.'** 

117.  DORMANT  PARTNER — When  a  dormant  partner  re- 
tires, he  need  give  no  notice  to  relieve  himself 
from  future  liability. 

When  a  dormant  partner  retires,  he  need  give  no  notice  of  bis  re- 
tirement in  order  to  free  himself  from  liability  in  respect  of  acts 

261  Lyon  T.  Johnson,  28  Conn.  1;  Shurlds  ▼.  Tilson,  2  McLean,  458,  Fed,  Cas. 
No.  12,827;    Watkinson  v.  Bank,  4  Whart.  (Pa.)  482. 

262  Shurlds  V.  Tilson,  2  McLean,  458,  Fed.  Cas.  No.  12,827;  Lansing  v.  Gaine, 
2  Johns.  (N.  Y.)  300;  Austin  v.  Holland,  09  N.  Y.  571;  Ellis  v.  Bronson,  40  III. 
455.  Persons  having  no  knowledge  of  a  partnership  are  not  entitled  to  notice 
of  its  dissolution.  Chamberlain  v.  Dow,  10  Mich.  319.  And,  as  to  all  persons 
who  have  not  had  dealings  with  the  firm,  notice  of  the  dissolution  by  publication 
in  some  newspaper  of  general  circulation  is  sufDcient,  whether  such  notice  is  seen 
by  the  parties  to  be  charged  therewith  or  not  Godfrey  v.  Turnbull,  1  Esp.  371; 
Wrightson  v.  Pullan,  1  Starkie,  375;  Godfrey  v.  Macauley,  1  Peake,  209;  New- 
•ome  V.  Coles,  2  Camp.  617;  Shurlds  v.  Tilson,  supra;  Watkinson  v.  Bank,  supra; 
Galliott  V.  Bank,  1  McMul,  (S.  C.)  209;  Mauldin  v.  Bank,  2  Ala.  502;  Lucaii 
7.  Bank,  2  Stew.  (Ala.)  280;  Lansing  v.  Gaine,  supra;  Prentiss  v.  Sinclair,  5  Vt 
149;  Graves  v.  Merry,  6  Cow.  701;  Polk  v.  Oliver,  50  Miss.  566;  Simonds  v. 
Strong,  24  Vt  642;  Martin  v.  Searles,  28  Conn.  43;  Martin  v.  Walton,  1  MoCord 
(S.  C.)  16. 

263  Coggswell  V.  Davis,  65  Wis.  191,  26  N.  W.  557;  Holdane  v.  Butterworth, 
5  Bosw.  (N.  Y.)  L 

264  Lovejoy  v.  Spafford,  93  D.  S.  430;  Solomon  v.  Kirkwood,  55  Mich.  256,  21 
N.  W.  336;  Hart  v.  Alexander,  2  Mees.  &  W.  484,  But  cf.  Goddard  t,  Pratt, 
la  Pick.  (Mass,)  412;   Martin  v.  Searles,  28  Conn,  43, 

266  Whitesides  t.  Lee,  2  lU.  550;   Howe  v.  Thayer,  17  Pick.  (Mass.)  9L 


§    118)  TERMINATION    OF    LIABILITY.  265 

done  after  his  retirement.'^*  The  reason  is  that,  as  he  was  never 
known  to  be  a  partner,  no  one  can  have  relied  on  his  connection 
with  the  firm,  or  truly  allege  that,  when  dealing  with  the  firm,  he 
continued  to  rely  on  the  fact  that  the  dormant  partner  was  still 
connected  therewith.  If  a  dormant  partner  is  known  to  certain 
individuals  to  have  been  a  partner,  he  is  as  to  them  no  longer  in  the 
situation  of  a  dormant  partner,  and  must  therefore  give  them  notice 
of  his  retirement  if  he  would  free  himself  from  liability  in  respect 
of  the  future  transactions  between  them  and  his  late  partners.'" 

SAME— PAST  ACTS. 

118.  The  liability  of  a  partner  for  past  acts  and  obligations 
of  the  partnership  is  terminated  by 

(a)  Payment  (p.  265). 

(b)  Release  (p.  268). 

(c)  Novation  (p.  269). 

(d)  Merger  (p.  271). 

Payment — By  One  Partner. 

Payment  of  a  partnership  debt  by  any  one  partner  discharges  all 
the  others,  if  the  object  of  the  partner  paying  was  to  extinguish  the 
whole  debt,  or  if  he  made  the  payment  out  of  the  partnership 
funds.""  But  if  a  firm  is  unable  to  pay  a  debt,  and  one  partner  out 
of  his  moneys  pays  it,  but  in  such  a  way  as  to  show  an  intention  to 
keep  the  debt  alive  against  the  firm  for  his  own  benefit,  this  payment 
by  him  will  be  no  answer  to  an  action  brought  against  the  firm  by  the 
creditor  suing  on  behalf  of  the  partner  who  made  the  payment.''" 
If  a  partner  is  indebted  on  his  own  account  to  a  person  to  whom  the 
firm  is  also  indebted,  and  that  partner,  with  the  moneys  of  the  firm, 

286  Kelley  v.  Hurlburt,  5  Cow.  (N.  Y.)  534;  Carter  v.  Whalley,  1  Barn.  &  Adol. 
11;  Davis  v.  Allen,  3  N.  Y.  168;  Armstrong  v.  Hussey,  12  Serg.  &  R.  315;  Ellis 
T.  Bronson,  40  111.  455;  Nussbaumer  v.  Becker,  87  111.  281;  Warren  v.  Ball.  37 
111.  81;  Gorman  v.  Davis  &  Gregory  Co.  (N.  C.)  24  S.  E.  770;  Scott  v.  Colmesnil, 
7  J.  J.  Marsh.  (Ky.)  416;   Grosvenor  v.  Lloyd,  1  Mete.  (Mass.)  19. 

287  Kelley  v.  Hurlburt,  5  Cow.  (N.  Y.)  534;  Nussbaumer  v.  Becker,  87  111.  281; 
Park  V.  Wooten's  Ex'rs,  35  Ala.  242;    Shamburg  v.  Ruggle«,  83  Fa.  St.  14S. 

288  Colgrove  v.  Tallman,  2  Lans.  (N.  Y.)  97. 
t«»  Mclntyre  v.  Miller,  13  Mees.  &  W.  725. 


266  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.  6 

makes  a  payment  to  the  creditor,  without  specifying  the  account  on 
which  it  is  paid,  the  payment  must  be  taken  to  have  been  made  on 
the  partnership  account,  if  made  out  of  partnership  funds.^^° 

Same — By  Neno  Firm. 

If  a  ftnn  is  indebted,  and,  by  the  retirement  of  the  original  part- 
ners, and  the  introduction  of  other  partners,  a  wholly  new  firm  is 
called  into  existence,  a  payment  by  the  new  firm,  expressly  or  im- 
pliedly, OD  behalf  of  the  old  firm,  of  the  debts  contracted  by  the  old 
firm,  will  extinguish  its  debt  as  between  that  firm  and  its  creditor. 
But  if  there  are  circumstances  showing  that  the  money  was  paid,  not 
on  behalf  of  the  old  firm,  and  in  discharge  of  its  liability,  but  as  the 
consideration  for  a  transfer  to  the  new  firm  of  the  creditor's  right 
against  the  old  firm,  the  right  of  the  creditor  to  sue  the  old  firm  will 
not  be  extinguished,  but  can  still  be  exercised  for  the  benefit  of  the 
new  finiL*^^ 

Same — Application,  of  Payments. 

Tlie  usual  rules  governing  the  application  of  payments  '^'  apply 
to  payments  by  partners.  Of  these  rules  the  most  important,  witli 
reference  to  the  subject-matter  of  the  present  treatise,  is  that  which 
is  known  as  the  "Rule  in  Clayton's  Case,"  '^'  that  where  there  is  one 
single  open  current  account  between  two  parties,  every  payment 
which  cannot  be  shown  to  have  been  made  in  discharge  of  some  par- 
ticular item  is  imputed  to  the  earliest  item  standing  to  the  debit  of 
the  payer  at  the  time  of  payment.  If,  therefore,  a  customer  of  a 
firm  of  bankers  has  funds  standing  to  his  credit  at  the  time  they  dis- 

2T0  Thompson  v.  Brown.  Moody  »&  M.  40. 

271  1  Lindl.  Partn.  22G. 

272  See  Clark,  Cont.  C>34.  A  check  of  a  firm  delivered  to  a  creditor  of  both 
the  firm  and  the  member  thereof  who  delivered  the  check  will  be  deemed  to  have 
been  given  in  payment  of  the  firm  debt,  though  that  debt  was  not  due  at  the  time 
of  deUvery,  and  the  debt  of  the  member  was  overdue,  where  there  is  no  evidence 
that  the  firm  consented  that  the  check  should  be  given  in  payment  of  the  part- 
ner's debt.  Rogers  v.  Betterton,  93  Tenn.  630,  27  S.  W.  1017.  Where  an  insur- 
ance agent,  who  was  indebted  to  his  company,  took  in  a  partner,  and  the  partnership 
thereafter  represented  the  company,  and  opened  new  books,  and  kept  its  business 
separate  from  that  formerly  done  by  the  agent,  payments  made  to  the  company 
during  the  existence  of  the  partnership  could  not  be  applied  to  the  agent's  indi- 
vidual debt,  as  against  his  co-partner.    Hofifman  v.  Smith  (Iowa)  63  N.  W.  182. 

27  8  1  Mer.  572. 


§118)  TERMINATION    OF    LIABILITY.  2fi7 

solve  partnership,  and  his  account  is  continued  by  their  successors, 
they  taking  new  deposits  and  honoring  his  drafts  as  if  no  change  had 
occurred,  and  blending  the  accounts,  then  the  pa^^nents  first  made 
by  the  new  firm  will  be  deemed  to  have  been  made  in  liquidation  of 
the  eai'liest  item  on  the  credit  side  of  the  customer's  account,  viz, 
the  balance  due  to  him  at  the  time  of  the  dissolution;  and,  conse- 
quently, if,  proceeding  on  this  principle,  that  balance  is  liquidated, 
the  customer  has  no  claim  against  the  old  firm  in  respect  of  his  ac- 
count with  them.-^* 

This  doctrine  is  of  great  importance  in  questions  relating  to  the 
discharge  of  retired  and  deceased  partners.  The  application  of  the 
rule  in  question  will  discharge  from  liability  the  estates  of  deceased 
partners;  ^'"'  the  estates  of  sole  traders,  if  their  business  has  been 
carried  on  by  others  without  any  break;""  and  retired  partners, 
whether  known  ^^^  or  dormant.*^*  Moreover,  the  discharge  of  the  de- 
ceased or  retired  partner  being  the  consequence  of  the  payment  to 
his  fonner  creditor,  the  discharge  does  not  depend  on  the  knowledge 
of  the  creditor  of  the  change  which  has  taken  place  in  the  firm.^^* 

This  has  an  important  bearing  on  the  position  of  iucouiing  part- 
ners; for,  although  they  are  not  liable  for  debts  contracted  before 
they  joined  the  firm,  still,  if  such  debts,  and  others  subsequently 
contracted,  are  allowed  by  an  incoming  piu'tner  to  form  one  single 
running  account,  and  payments  are  made  generally  in  respect  of 
it,  those  payments,  although  made  with  the  money  of  the  new  firm, 
\vill  be  applied  to  the  old  debt,  and  a  balance  will  be  left  for  which 
the  incoming  partner  will  be  liable.**''  But  the  rule  in  Clayton's 
Case  cannot  be  insisted  on  to  the  prejudice  of  a  new  partner  with- 
out his  consent,  express  or  tacit.  Without  such  consent,  a  cred- 
itor of  the  old  firm  who  goes  on  dealing  with  the  new  firm  has  no 

274  See  Allen  v.  Smeltin},'  Co.,  73  Mo.  OSS;    Whitwell  v.  Warner,  20  Vt.  425. 

276  See  Sterndale  v.  Hankinson,  1  Sim.  303;   Clayton's  Case,  1  Mer.  572. 

278  Smith  V.  Wiflcy,  3  Moore  &  S.  174;    Sterndale  v.  Hankinson,  1  Sim.  393. 

277  Allcott  V.  Strong.  9  Cu.sh.  (Mass.)  323;  Wiesenfeld  v.  Byrd,  17  S.  C.  106; 
Hooper  v.  Keay,  1  Q.  B.  Div.  178.  But  see  Baker  t.  Stackpoole,  9  Cow.  (N.  Y.) 
420. 

278  Newmarch  v.  Clay.  14  East.  239;    Brooke  v.  Enderby,  2  Brod.  &  B.  70. 

279  Pardee  v.  Markle,  111  Pa.  St.  548,  5  AtL  36;  Scott  t.  Beale,  6  Jur.  (N.  S.) 
559. 

«••  Scott  V.  Beale,  U  Jur.  (N.  S.)  559. 


268  RIGHTS    AND    LIABILITIES    AS    TO    THIRU    PEBriONS.  (Ch.   6 

right  to  appropriate  a  payment  made  by  a  new  partner  to  a  debt 
owing  by  his  co-partners,  nor  to  run  two  distinct  accounts  together, 
and  treat  a  general  payment  as  made  in  respect  of  the  earliest 
items.^®^ 

The  rule  in  Clayton's  Case,  however,  applies  only  to  an  entire  un 
broken  account,  and  has  no  application  to  cases  where  one  person 
is  indebted  to  another  in  respect  of  several  matters,  each  of  which 
forms  the  subject  of  a  distinct  account.^''  Nor  does  the  rule  ap- 
ply to  defeat  the  intention  of  the  parties.  If  it  can  be  shown  that 
some  other  appropriation  was  intended,  the  rule  ceases  to  be  applica- 
ble.*" Upon  the  same  principle,  viz.  that  the  rule  in  Clayton's  Case 
is  founded  on  the  presumed  intention  of  the  parties,  it  follows  that 
it  cannot  be  applied,  as  against  a  person  who  is  a  creditor,  in  respect 
of  a  fraud  committed  on  him,  and  of  which  he  is  ignorant."* 

Release. 

A  release  of  one  partner  from  a  partnership  debt  discharges  all 
the  others;  for,  where  several  persons  are  bound  jointly,  or  jointly 
and  severally,  a  release  of  one  is  a  release  of  them  all.'*"  But  in 
this  respect  a  covenant  not  to  sue  difPf^rs  from  n  release;  for  al- 
though, where  there  is  only  one  debtor  and  one  creditor,  a  covenant 
by  the  latter  never  to  sup  the  former  is  equivalent  to  a  release,  a 
covenant  not  to  sue  does  not  operate  as  a  release  of  n  doht  owing  to 
or  by  other  persons  besides  those  who  are  parties  to  the  covenant."' 

281  1  Lindl.  Partn.  231. 

282  Simson  ▼,  Ingham,  2  Barn.  &  C.  65;  In  re  Hallett* §  Estate,  13  Oh.  Div.  696. 

283  Bums  V.  rillsbnry.  17  N.  H.  60;  Wickham  v.  Wickham,  2  Kny  &  J.  478; 
Taylor  v.  Kymer,  3  Barn.  &  Adol.  20. 

284  Liodl.  Partn.  2.36.     And  see  Lacey  t.  Hill,  4  Ch,  Dlv.  637. 

288  u.  S.  V.  Thompson.  Gilp.  614,  Case  No.  16,487;  Cocks  v.  Nash,  9  Bing.  341; 
Bower  v.  Swadlin,  1  Atk.  294;  Ex  parte  Slater,  6  Ves.  146;  Kiffin  t.  Willis,  4 
Mod.  379;  Lacy  t.  Kinaston,  1  L<1.  Raym.  690.  But  see  Greenwald  v.  Raster, 
86  Pa.  St.  45. 

286  Bates  V.  Bank  (Tex.  Civ.  App.)  32  S.  W.  .339;  Hutton  t.  Eyre,  6  Taunt 
280;  Dean  v.  Newhall,  8  Term  R.  108.  An  mstniment  of  ambiguous  Import 
will  be  construed  as  a  covenant  not  to  sue,  rather  than  as  a  release,  whenever 
possible.  Parmelee  v.  Lawrence,  44  111.  405;  Greenwald  v.  Raster,  86  Pa,  St. 
45;  Burke  v.  Noble,  48  Pa.  St.  108;  Seymour  v.  Bnller,  8  Iowa,  304;  Grant  v. 
Holmes,  75  Mo.  109;  Shaw  v.  Pratt,  22  Pick.  (Mass.)  305;  De  Zeng  v.  Bailey, 
9  Wend.  (N.  Y.)  336.  By  statute  in  several  of  the  states,  when  any  partnership 
it  dissolved,  any  partner  may   make  a  separate  composition  with  one  or  all  of 


§118)  TERMINATION    OF    LIABILITY.  269 

Novation. 

A  creditor  who,  after  a  partner  has  retired  from  a  firm,  treats  the 
continuing  partners  as  his  debtors,  does  not,  wituout  more,  discharge 
the  retired  partner.*'^  Moreover,  if  the  continuing  partners  give 
a  new  security  for  the  old  debt,  this  will  not  operate  to  discharge 
the  retired  partner,  unless  the  creditor  intended  that  such  should 
be  the  case,  or  unless  the  new  security  is  of  such  a  nature  as  to 
merge  the  original  debt."'  There  is  no  difference,  in  such  cases, 
between  the  liability  of  a  retired  partner  at  law  or  in  equity.''" 
The  same  rule  applies  to  dormant  partners  who  retire  while  the 
firm  is  indebted  even  more  strongly  than  to  others,  for  a  creditor 
who  has  a  security  of  which  he  is  unaware  cannot  intentionally  give 
up  that  security.""  The  introduction  of  a  new  partner  has  no 
effect  on  the  liability  of  a  retired  partner,  unless  the  liability  of  the 
former  is  substituted  by  the  creditor  for  that  of  the  latter,  which 
cannot  be  the  case  unless  the  creditor  can.  as  of  right,  hold  the  , 
new  partner  liable  for  the  old  debt.  Even  if  the  new  firm  adopts 
the  old  debt,  and  pays  interest  on  it,  this  is  prima  facie  only  in 
pursuance  of  some  agreement  between  the  partners  themselves; 
and  a  creditor  who  does  no  more  than  allow  the  partners  to  carry 
out  that  agreement  does  not  debar  himself  of  his  right  to  look  for 
payment  to  those  originally  indebted  to  him."^     In  some  cases,  as 

the  firm  creditors;  and  such  composition  will  be  a  full  discharge  to  the  debtors 
making  it,  and  to  them  only,  of  all  liabilities  to  the  creditors  with  whom  the 
same  is  made,  incurred  by  reason  of  such  partner's  connection  with  the  firm. 
Rhode  Island:  Gen.  Laws,  IS'JO,  c.  156,  §§  1,  2,  5.  New  York:  Code  Civ.  Proc. 
i  li>42.  New  Jersey:  Gen.  St.  1895.  p.  2338.  §  10.  Pennsylvania:  Pepper  &  L. 
Dig.  "Partnership."  §  11.  Ohio:  Rev.  St.  1890,  §  31(52.  Michigan:  How.  Ann. 
St.  §  7783.  Kansas:  Gen  St.  1889.  c.  76.  §  1.  Montana:  Civ.  Code,  §  2082. 
South  Carolina:     Rev.  St  1893,  §  2311. 

28T  Botsford  V.  Kleinhaus.  29  Mich.  \\:V1\    Benson  v.  Hadfield,  4  Hare,  32,  37. 

288  Walstrom  v.  Hopkins,  103  Pa.  St.  118;  Luddiugton  v.  BeU,  77  N.  Y.  138; 
Bedford  v.  Deakin,  2  Bam.  &  Aid.  210. 

288  Oakford  v.  Steam  Shipping  Co.,  1  Heu.  &  M.  182. 

«»o  Robinson  v.  Wilkinson,  3  Price,  538. 

a«i  U.  S.  Nat  Bank  v.  Underwood,  2  App.  Div.  342,  37  N.  Y.  Supp.  838; 
Day  V.  Wetherby,  29  Wis.  363;  Griffee  v.  GrifEee,  173  Pa.  St.  434,  34  AtL  44; 
Hopkins  v.  Carr,  31  Ind.  260;  HaU  v.  Jones,  56  Ala.  498;  GaUck  v.  Gulick,  16 
N.  J.  Law,  186. 


270  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6- 

already  seen,  it  is  held  that  creditors  can  maintain  an  action  against 
the  new  firm  where  it  has  agreed  with  the  retiring  partners  to  pay 
the  debts  of  the  old  finn,  especially  when  the  new  firm  receives 
assets  from  the  old  firm."'  But  it  by  no  means  follows  that  a  cred- 
itor who  assents  to  an  arrangement  by  which  a  new  person  becomes 
liable  to  him  consents  to  abandon  his  hold  on  another  person  clearly 
liable  to  him  already;  and,  unless  a  substitution  of  liability  can  be 
established,  the  old  liability  remains.'*'  A  retired  partner  may  be 
discharged  by  the  creditor's  adoption  of  the  other  partners  as  his 
sole  debtors,  although  no  new  partner  has  been  introduced  into  the 
firm.'**  An  express  agi'eement  by  the  creditor  to  discharge  a  re- 
tired partner,  and  to  look  only  to  a  continuing  partner,  is  not  in- 
operative for  want  of  consideration,'*''  The  inference  that  a  retired 
partner  has  been  discharged  is  greatly  facilitated  by  the  circum- 
stance that  a  new  partner  has  joined  the  firm  and  become  liable  to 
the  creditor  in  respect  of  the  debt  in  question.  But  this  is  not  nec- 
essarily conclusive,  for  there  may  be  circumstances  showing  that 
such  was  not  the  intention  of  the  parties.  At  the  same  time,  in  the 
absence  of  any  such  evidenc*',  the  acceptance  by  the  creditor  of  the 
liability  of  a  new  partner  will  practically  preclude  him  from  after- 
wards liaving  recourse  to  the  retired  partner.-*" 

The  fact  that  a  creditor  has  taken  from  a  continuing  partner  a 
new  security  for  a  debt  due  from  him  and  a  retired  partner  jointly. 
is  strong  evidence  of  an  intention  to  look  only  to  the  continuing 
partner  for  payment.'*'  And  a  creditor  who  assents  to  a  transfer 
of  his  debt  fioni  an  old  firm  to  a  new  firm,  and  goes  on  dealing  with 
the  latter  for  many  years,  making  no  demand  for  payment  against 
the  old  firm,  may  not  unfairly  be  inferred  to  have  discharged  the 

■-»-  !ice  autc,  p.  231. 

283  Harris  v.  Farwoll,  13  Bear.  31. 

2  84  York  V.  Ortoa,  Go  Wis.  C,  26  N.  W.  106;  Regester  ▼.  Dodge.  6  Fed.  6; 
Thompson  v.  Percival,  5  Barn.  &  Add.  925;    Evans  v.  Drummond,  4  Ksp.  81>. 

286  Backus  V.  Fobes,  20  N,  Y.  204;  Collyer  t.  Moulton,  0  R.  I.  IK);  Aetna  Ins, 
Co.  V.  Peck,  28  Vt.  1)3 ;  Thompson  v.  Percival,  5  Barn.  &  Adol.  925  (overruling 
Lodfe'c  V.  Dicas,  3  Barn.  &  Aid.  611). 

2  86  1  Lindl.  Partn.  248, 

2»i  Evans  v.  Drummond,  4  Esp.  89.  And  see  1  Bates,  Partn.  §  528;  cf.  Reed  v 
White,  5  Esp.  122. 


§    118)  TERMINATION    OF    LIABILITY.  271 

old  firm.***  A  creditor  may  so  conduct  himself  as  to  be  estopped 
from  saying  that  a  retired  partner  is  still  liable  to  him.  But  it  is 
not  often  that  this  can  be  established.  A  settlement  by  partners 
of  their  accounts,  on  the  footing  that  one  of  them  only  is  liable  to 
a  creditor,  will  not  affect  him,  unless  he  has  been  guilty  of  some 
fraud,  or  has  done  some  act  or  made  some  statement  in  order  to 
induce  the  partners,  or  one  of  them,  to  settle  their  accounts  on  the 
faith  that  one  of  them  is  no  longer  liable.^®' 

Where  a  continuing  partner  has  assumed  the  debts  of  the  old 
firm,  the  retiring  partner  occupies,  as  to  him,  the  position  of  a 
surety.  If  the  former  fails  to  carry  his  agreement,  and  the  retiring 
partner  is  compelled  to  pay,  he  has  a  right  to  be  subrogated  to  all 
the  rights  of  the  creditor.*""  Some  of  the  cases  hold  that  the  re- 
tiring partner  is  a  surety  a-s  to  creditors,  also,  when  thoy  know  of  the 
agreement  for  the  payment  of  the  debts  by  the  continuing  partner, 
and  that  an  extension  of  time  given  the  latter  without  the  consent 
of  the  retiring  partner  discharges  him.'°^  Other  cases,  however, 
deny  this  effect  to  such  an  agreement  unless  the  creditor  assents.'*" 

Merger. 

When  a  creditor  obtains  from  his  debtor  a  security  of  a  higher 
nature  than  he  had  before,  and  does  not  take  care  to  accept  it  as 
a  collateral  security,  the  original  debt  is  merged  in  the  higher  se- 
curity, and  can  no  longer  be  made  the  foundation  of  an  action, 
or  of  proof  in  bankruptcy;  and  this  doctrine  is  as  much  applicable 
to  joint  as  to  several   obligations.*"'      If  a  joint   creditor  obtains 

2»»  Hnrt  ▼.  Alexander,  2  Mees.  &  VV.  484;  Wilson  v.  Lloyd,  L.  R.  1(5  Eq.  GO; 
Brown  v.  Gordon,  10  Bcav.  302. 

299  Featherstone  v.  Hunt,  1  Bam.  &  C.  113;  Davison  t.  Donaldson,  9  Q.  B 
Div.   G23. 

«oo  Scott's  Appeal,  88  Pa.  St.  173;  Shamburg  t.  Abbott,  112  Pa.  St.  G,  4  Atl. 
.*.18;  Conwell  r.  McCowan,  81  111.  285;  Chandler  t.  Higgins,  109  111.  602: 
Laylin  v.  Knox,  41  Mich.  40,  1  N.  W.  913;    Rodgers  v.  Maw,  15  Mees.  &  W.  444. 

801  Gates  v.  Hughes,  44  Wis.  332;  Palmer  v.  Purdy,  83  N.  Y.  144;  Savage  v. 
Putnam,  32  N.  Y.  501;  Smith  v.  Shelden,  35  Mich.  42;  Johnson  v.  Young,  20  W. 
Va.  614. 

802  Whittier  t,  Gould,  8  Watts  (Pa.)  485;  Williams  v.  Boyd,  75  Ind.  286; 
Rawson  t.  Taylor,  30  Ohio  St,  389.  This  is  the  English  doctrine.  1  Bates,  Partn. 
5§  533.  534. 

808  Wood  worth  v.   Spaffords,  2  McLean,  1G8,  Fed.  Cas.  No.  18,020;     Mason   v 


272  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.    6 

judg:ment  against  one  of  the  partners  only,  he  loses  his  remedy 
against  the  others  even  if  not  known  to  him.^°*  But  this  rule  does 
not  apply  when  the  other  partners  are  beyond  the  jurisdiction  of 
the  court,  and  consequently  no  personal  judgment  can  be  obtained 
against  them.^°'  If  one  partner  only  is  sued,  and  judgment  is 
given  for  him,  the  creditor  is  not  precluded  from  afterwards  suing 
the  others,  unless  the  first  action  failed  for  a  reason  which  applies 
equally  to  the  second. ^'*'  A  judgment  recovered  against  continu- 
ing partners  and  an  incoming  partner  is  a  defense  to  an  action 
against  a  retired  partner  who  might  have  been  sued  with  the  con- 
tinuing partners  in  the  first  instance.""^ 

Liabilities  which  are  joint  and  several  are  not  merged  by  a  judg- 
ment against  one  partner,  whether  the  liability  is  ex  contractu  "" 
or  ex  delicto.'"'*  The  English  rule  as  to  liability  ex  delicto  is  con- 
tra.'^" Further,  if  several  persons  are  jointly  liable,  and  one  of 
them  afterwards  gives  a  separate  collateral  security,  on  which  judg- 
ment is  recovered  against  him,  this  will  not  merge  the  prior  joint 
liability."'^ 

Same — Deceased  Partners. 

When  a  partner  died,  his  liability  on  contracts  survived  at  law 
to  his  co-partner,  who  alone  could  be  sued  in  respect  to  them.  Hence 
a  judgment  recovered  against  the  surviving  members  of  a  firm  does 

Eldred,  6  Wall.  231;  Smith  v.  Black.  9  Serg.  &  R.  (Pa.)  14'J;  Thompson  v. 
Emmert,  15  111.  415;  Ward  t.  Johnson,  13  Mass.  148;  North  v.  Mudge,  13  Iowa, 
496. 

304  How  v.  Kane,  2  Pin.  (Wis.)  531;  Olmstead  v.  Webster.  8  N.  Y,  413; 
Anderson  t.  Levan,  1  Watts  &  S.  (Pa.)  334.  But  see  Scott  v.  Colmesnil,  7  J.  J. 
Marsh.  (Ky.)  416.  The  rule  is  otherwise  by  statute  in  some  states.  Mason  ▼. 
Eldred.  6  Wall.  231. 

806  Yoho  T.  McGovern,  42  Ohio  St.  11;    Ells  v.  Bone,  71  Ga.  466. 

806  Phillips  T.  Ward,  2  Hurl.  &  C.  717, 

807  Scarf  V,  Jardine,  7  App.  Cas.  345. 

808  Trafton  v.  U.  S.,  3  Story,  646,  Fed.  Cas.  No.  14,135;  Pierce  t.  Kearney,  5 
Hill  (N.  Y.)  82;  Oilman  v.  Foote,  22  Iowa,  560;  Sherman  v.  Christy,  17  Iowa, 
322.     Cf.  Ex  parte  Christie,  Mont.  &  B.  352. 

80  9  1  Jag.  Torts,  341. 

810  Id.;    Brown  v.  Wootton,  Cro.  Jac.  73;    Buckland  r.  Johnson,  15  C.  B.  145; 
Brinsmead  v.  Harrison,  L.  R.  6  C.  P.  584;    Id.,  L.  R.  7  C.  P.  547. 
•11  Davis  T.  Anable,  2  Hill  (N.  Y.)  339;    Drake  v.  Mitchell,  3  East,  251. 


§    119)  RIGHTS    IN    FIRM    AND   SEPARATE    PROPERTY.  273 

not  preclnde  the  judgment  creditor  from  obtaining  payment  of  the 
original  debt  from  the  estate  of  the  deceased  partner  in  equity;'" 
nor  does  proof  against  his  estate  afford  a  defense  to  an  action 
against  the  surviving  partners."" 

RIGHTS  IN  FIRM  AND  SEPARATE  PROPERTY. 

119.  The  rights  of  tliird  persons  in  the  property  of  the  firm 
and  of  the  individual  partners  will  be  considered 
under  the  following  heads: 

(a)  Firm  creditors  in  firm  property  (p.  274). 

(b)  Partners  in  firm  property  (p.  280). 

(c)  Separate  creditors  in  firm  property  (p.  283). 

(d)  Separate  creditors  in  separate  property  (p.  285). 

(e)  Firm  creditors  in  separate  property  (p.  287). 

(f)  Partners  in  separate  property  (p.  293;. 

(g)  Joint   and   separate    creditors   in    firm   and   separate 

property  (p.  2  J 6). 

WTien  one  member  of  a  firm  dies  or  becomes  insolvent,  or  the  firm 
itself  becomes  insolvent,  nuiny  questions  arise  as  to  the  miuiner  of 
distributing  the  property  of  the  partnership  and  of  the  individual 
members.  The  discussion  of  these  rules,  which  is  to  follow,  is  taken 
almost  entirely  from  the  principles  which  govern  the  distribution 
of  The  assets  of  bankrupt  lirms  and  their  members;  but  the  same 
principles  apply  to  the  administration  of  the  estates  of  deceased 
partners."*  The  rights  of  the  different  kinds  of  creditors  are  work- 
ed out  through  the  principle  of  a  partner's  lien  already  discussed.'** 
The  creditors  themselves  have  no  lien  unless  expressly  created.^'' 

812  Liverpool  Borough  Bank   t.  Walker,  4  De  Gei  &  J.  24;    Jacomb   v,   Uur- 
wood,  2  Ves.  Sr.  2G5. 
313  In  re  Hodgson.  31  Ch.  Div.  177. 

814  Gray  v.  Chiswell,  9  Ves.  118. 

815  Ante,  p.  179. 

816  2  Bates,  Partn.  §  824;  Wnples-Platter  Co.  t.  Mitchell  (Tex.  CW.  App.)  35 
S.  W.  200;  Richards  v.  Leveille,  44  Neb.  38.  f)2  N.  W.  304.  A  co-partnership  does 
not  hold  its  property  in  trust  for  its  creditors,  nor  have  its  creditors  a  lien  upon 
Its  property  by  reason  of  being  such,  so  as  to  preclude  it  from  preferring  one  of 
its  creditors  in  good  faith.    Aetna  Ins.  Co.  v.   Bank  of  Wilcox  (Neb.)  67  N,  W. 

GEO.PAIIT.— 18 


274  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 


SAME— FIRM  CREDITORS  IN  FIRM  PROPERTY. 

120.  Firm  creditors  are  entitled  to  priority  of  payment  out 
of  the  firm  property,  except 
EXCEPTIONS— (a)  Where  there   is   a   dormant  partner, 
but  no  ostensible  firm  (p.  27B). 

(b)  Where  the  obligation  is  a  joint,  but  not  a  firm,  obli- 

gation (p.  276). 

(c)  Where  firm  property  has  been  converted  in  good  faith 

into  separate  property  (p.  277). 

The  joint  creditors  have  the  first  claim  for  payment  out  of  the 
joint  estate; '^^  and,  until  they  have  been  paid  all  the  principal 
moneys  due  to  them,  with  interest  thereon,  if  their  debts  carry  in 
terest,  no  other  person  is  entitled  to  receive  anything  out  of  the 

449;    Richards  v.  Leveille,  44  Neb.  38,  62  N.  W.  304.      But  see  Steele  v.  Bank 
(Neb.)  66  N.  W.  841. 

317  Hartman'8  Appeal,  107  Pa.  St.  327;  Black's  Appeal,  44  Pa.  St.  503;  Muui- 
ford  V.  Nicoll,  20  Johns.  (N.  Y.)  611;  Bush  v.  Clark,  127  Mass.  Ill;  Prestou  v. 
Colby,  117  III.  477,  4  N.  E.  375;  Pahlman  v.  Graves,  26  111.  405;  In  re  Lloyd,  22 
Fed.  90;  Murrill  v.  Neill,  8  How.  414;  In  re  Childs,  9  Ch.  App.  508.  The  rule  that 
firm  property  shall  be  subject  first  to  the  payment  of  firm  debts,  in  preference  to  in- 
dividual debts,  is  enforceable  only  in  equity.  Coe  v.  Shoe  Co.,  61  111.  App.  602. 
Where  a  cause  of  action  for  the  breach  of  a  contract  made  with  a  partnership  ac- 
crues before  the  death  of  one  of  the  partners,  the  damages  recoverable  therefor  by 
the  survivor  should  be  listed  as  a  firm  asset.  Richards  v.  Maynard,  Id.  336.  Where 
a  partner,  in  his  own  name,  sold  partnership  lands,  with  the  consent  of  the  other 
partner,  and  the  proceeds  of  sales  were  credited  on  the  books  of  the  firm,  it  was 
proper  for  the  court,  in  a  suit  to  dissolve  the  partnership  and  settle  its  affairs,  to 
determine  that  said  lands  were  partnership  assets,  for  the  purpose  of  paying  its 
debts,  and  therefore  the  heirs  of  the  latter  partner  could  not  equitably  claim  any 
interest  therein.  Dunlap  v.  Byers  (Mich.)  67  N.  W.  1067.  Under  an  assignment 
for  the  benefit  of  creditors,  a  note  given  for  obligations  of  the  firm  should  be  al- 
lowed against  the  firm  assets,  though  it  was  signed  by  the  partners  individually. 
Union  Nat.  Bank  v.  Dreyfus,  61  III.  App.  323.  An  insolvent  partnership,  com- 
posed of  three  of  the  four  members  of  another  insolvent  partnership,  cannot  as  a 
creditor  of  the  latter,  share  equally  with  its  other  creditors  in  the  distribution  of 
its  assets.  McCruden  v.  Jonas,  173  Pa.  St.  507,  34  Atl.  224;  Appeal  of  Green- 
boum,  Id.  Where  one  of  the  members  of  an  insolvent  firm  sells  out  his  interest, 
and  a  new  firm  is  formed,  which  assumes  the  debt  of  the  old  firm,  and  continues 
♦ie  business  with  the  same  assets,  and  makes  an  assignment  for  benefit  of  cred- 


§    120)  RIGHTS    OF    FIRM    CREDITORS    IN    FIRM    PROPERTY.  275 

assets  of  the  firm.  If  a  person  is  truly  a  creditor  of  the  firm,  he  is 
not  deprived  of  his  right  to  rank  as  a  joint  creditor  merely  because 
he  may  have  some  separate  security  for  his  debt;  for  he  is  treated, 
in  such  a  case,  as  a  joint  creditor,  having  the  advantage  of  a  col- 
lateral security.'^' 

Nominal  Partner — No  Actual  Firm. 

Those  who  deal  with  persons  representing  themselves  to  cred- 
itors generally  as  partners  in  a  certain  business  ai'e  entitled  to  have 
the  property  used  in  such  business  applied  to  the  payment  of  tlie 
debts  incurred  in  such  business  in  preference  to  the  individual  debts 
of  the  members  of  the  partnership,  and  the  ostensible  member  of 
such  partnership  is  likewise  entitled  to  have  the  assets  of  the  os- 
tensible firm  so  applied,"* 

itors,  the  creditors  of  the  old  and  new  firms  may  prove  their  claims  pari  passu, 
and  be  preferred  over  individual  creditors  of  such  new  firm.  But  where  one  of 
the  members  of  an  insolvent  firm  sells  out  his  interest  under  a  promise  that  the 
firm  debts  shall  be  paid  out  of  the  firm  assets,  creditors  of  the  old  firm  and  a 
creditor  of  the  new  firm  cannot  prove  pari  passu  with  the  individual  creditors  ot 
a  partner  in  the  first  firm,  who  did  not  continue  in  the  new  firm  on  an  assign- 
ment by  such  partner.  Thayer  v.  Humphrey,  91  Wis.  27G,  64  N.  W.  1007;  Da  vies 
V.  Same,  Id.  Covenants  of  the  partners  with  each  other  cannot  affect  firm  cred- 
itors. Lord  Craven  v.  Widdows,  2  Cas.  Ch,  139.  As  respects  the  satisfaction  of 
debts  out  of  partnership  property,  the  priority  of  partnership  over  individual  cred- 
itors depending  on  no  absolute  right  of  the  firm  creditors,  but  being  derived  merely 
from  the  lien  of  each  partner  upon  such  property  to  have  firm  debts  paid,  rather 
than  that  resort  should  be  had  for  that  purpose  to  his  private  property,  a  single 
sale  of  the  whole  corpus  of  firm  property  may  be  made  by  the  sheriff  under  execu- 
tions in  his  hands  issued  upon  separate  judgments,  recovered  by  different  plaintiffs 
against  the  several  different  partners  as  individuals;  and  the  purchaser  is  not  post- 
poned to  the  satisfaction  of  firm  creditors  in  the  enjoyment  of  his  purchase,  nor  is 
the  firm  creditor  in  a  position  to  complain.  Doner  v.  Stauffer,  1  Pen.  &  W.  (Pa.) 
198. 

818  In  re  Howard,  4  N.  B.  R.  571,  Fed.  Cas.  No.  6,750;  Tucker  v.  Oxley,  5 
Cranch,  34;   Ex  parte  Clowes.  2  Brown,  Ch.  595;   Ex  parte  Hunter,  1  Atk.  223,  227. 

819  Thayer  v.  Himiphrey,  91  Wis.  276,  64  N.  W.  1007.  A  member  of  a  part- 
nership, created  by  holding  out,  cannot,  on  dissolution  of  the  firm,  prove  a  claim  of 
his  own  against  the  firm  assets,  in  competition  with  the  firm  creditors.  Gibbs  v. 
Humphrey,  91  Wis.  Ill,  64  N.  W.  750.  A  creditor  of  an  ostensible  partnership 
cannot  subject  the  property  which  is  in  the  possession  and  use  of  the  actual  part- 
ners to  the  payment  of  his  claim,  in  priority  to  creditors  of  the  actual  partners, 
Broadway  Nat  Bank  v.  Wood,  165  Mass.  312,  43  N.  E.  100.    , 


276  BIQHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.  6 

Dormant  Partm^ — No  Ostensible  Firm. 

The  prior  right  of  a  partnership  creditor  to  be  paid  out  of  the 
common  property  in  preference  to  a  separate  creditor  of  either  of  the 
partners  does  not  exist  in  the  case  of  a  dormant  partnership.  In 
such  case,  a  creditor  whose  debt  relates  to  the  business  of  the  firm, 
and  who  is  behind  the  creditors  or  vendees  of  the  ostensible  partner 
in  his  attachment,  is  not  permitted  to  defeat  them,  and  gain  a  pri- 
ority, because  he  has  discovered  the  concealed  liability  of  a  secret 
partner.^^"  The  true  principle  in  these  cases  is  that  those  funds 
shall  be  liable  on  which  the  credit  is  given.  In  an  open  firm,  the 
credit  is  given  to  the  firm,  and  to  the  goods  they  are  possessed  of, 
and  a  partnership  creditor  is  first  paid  out  of  them;  but,  if  the  part- 
ner be  unknown,  the  credit  is  given  to  the  visible  partner  only,  and 
the  goods  in  his  possession  are  supposed  to  be  his  own,  and  in  such 
case  the  discovery  of  such  latent  partner  cannot  give  any  preference 
to  a  partnei-ship  creditor.  As  between  the  partners  themselves, 
there  is  no  reason  to  make  any  distinction  in  their  rights,  whether 
any  are  dormant  or  not;  but,  as  to  the  public,  it  is  not  only  highly 
proper,  but  necessary  to  prevent  injustice  towards  creditors,  that  this 
difference  should  be  observed.'*^  Tlie  dormant  partner  has  clearly 
no  equity  to  require  the  application  of  the  partnership  property  to 
the  payment  of  the  firm  debts,  to  his  exoneration,  as  against  the 
creditors  of  the  ostensible  partner,  who  has  been  dealt  with  as  the 
sole  owner.^2*  p^^^  ^j^^  creditors  of  the  firm,  who  have  no  equity, 
except  such  as  can  be  worked  out  through  the  dormant  partner, 
cannot  require  that  the  partnership  property  be  first  applied  to 
the  satisfaction  of  their  debts.'*^  It  is  a  race  of  diligence  between 
the  two  classes  of  creditors,  and  equity  will  not  interfere  to  deprive 
either  of  a  legal  advantage.'** 

Joint  hut  not  Firm  Debt. 

This  priority  in  the  distribution  of  the  partnership  property  is 
given  to  firm  creditors  only.     The  reason  of  the  rule  fails  when  a 

82  0  French  v.  Chase,  6  Me.  166;  Cammack  v.  Johnson,  2  N.  J.  Eq.  163. 

821  Lord  V.  Baldwin,  6  Pick.  (Mass.)  348. 

822  Cammack  v.  Johnson,  2  N.  J.  Eq.  163. 

823  French  v.  Chase,  6  Me.  166;  Lord  v.  Baldwin,  6  Pick.  (Mass.)  348. 

8  24  Hillman  v.  Moore,  3  Tenn.  Ch.  454;  Whit  worth  v.  Patterson,  6  Lea  (Tenn.) 
119. 


§    120)  RIGHTS    OF    FERM    CREDITORS    IN    FIRM    PROPERTY.  277 

debt  or  liability  has  not  been  incurred  for  the  firm  as  such,  eyen 
though  all  the  persons  who  compose  the  firm  may  be  parties  to  the 
contract  Thus,  if  a  firm  be  composed  of  two  persons,  associated 
for  the  conduct  of  a  particular  branch  of  business,  it  can  hardly  be 
maintained  that  the  joint  contract  of  the  two  partners,  made  in 
their  individual  names,  respecting  a  matter  that  has  no  connection 
with  the  firm  business,  creates  a  liability  of  the  firm  as  such."" 

Conversion  of  Firm  into  Separate  Property. 

The  rule  that  obtains  in  the  distribution  of  the  estate  of  part- 
ners, and  under  which  partnership  creditors  are  entitled  to  priority 
of  payment  out  of  the  partnership  assets,  is  an  equitable  doctrine, 
for  the  benefit  and  protection  of  the  partners,  respectively.  Part- 
nership creditors  have  no  lien  upon  partnership  proi)erty.  Their 
right  to  priority  of  payment,  out  of  firm  assets,  over  the  individual 
creditors,  is  always  worked  out  through  the  lien  of  the  partners.^-" 
Upon  the  death  of  one  partner,  or  when  the  firm  becomes  bankrupt, 
or  where  the  partnership  assets  are  being  administered  by  a  court, 
the  rule  of  equitable  distribution  is  applicable  to  its  fullest  extent. 
Where,  however,  the  partners  have  the  possession  and  control  of 
their  own  property,  they  have  the  right  to  make  any  honest  disposi- 
tion of  it  they  saw  fit.  Each  has  the  right  to  waive  his  equitable 
lien,  and  together  they  may  sell,  assign,  or  mortgage  the  property 
of  the  firm  to  pay  or  secure  either  an  individual  debt  of  one  of  the 
partners  or  the  debts  of  the  firm."^  Where  debts  are  fairly  owing 
by  either  partner  individually,  the  mere  preference  of  individual 
over  partnership  creditors,  by  the  execution,  in  the  firm  name  or  by 
authority  of  the  partners,  of  a  chattel  mortgage  upon  the  property 
of  the  firm,  is  not  of  itself  such  a  fraud  upon  the  partnership  cred- 

825  Forsyth  v.  Woods,  11  Wall.  484;  Turner  v.  Jaycoi,  40  N.  Y.  470;  Ex  parte 
Weston.  12  Mete.  (Mass.)  1.  But  see  Saunders  v.  Reilly,  105  N.  Y.  12,  12  N.  E. 
170;  Hoare  v.  Bank  Corp.  2  App.  Cas.  589. 

"2  6  Warren  v.  Farmer,  100  Ind.  593,  597;  Trentman  v.  Swartzell,  85  Ind.  443. 

827  Case  V.  Beauregard,  99  U.  S.  119;  Baker's  Appeal,  21  Pa.  St.  76;  Goembel 
T.  Arnett,  100  111.  34;  Hapgood  v.  Comwell,  48  111.  64;  Sage  v.  Chollar,  21  Barb. 
(N.  Y.)  59G;  Dimon  v.  Hazard,  32  N.  Y.  G5;  Sylvester  v.  Henrich  (Iowa)  61  N. 
W.  942;  Miller  v.  Gunderson  (Neb.)  67  N.  W.  769.  But  a  preference  of  individual 
debts  of  a  partner  in  an  assignment  by  the  firm  is  void.  Schiele  v.  Healy,  10  Daly, 
92;  Vernon  v.  Upson,  60  Wis.  418,  19  N.  W.  400;  Willis  v.  Bremner,  60  Wis.  622, 
19  N.  W.  403. 


278  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

iters  as  will  authorize  the  setting  aside  of  the  chattel  mortgage  at 
the  suit  of  a  creditor.^-® 

Where  a  sale  or  pledge  of  partnership  property  is  fraudulent  in 
fact,  so  as  to  invoke  the  jurisdiction  of  the  court  on  behalf  of  the 
creditors  to  set  it  aside,  the  equitable  rule  of  distribution  will  be 
applied. ^2"      Partners,  the  same  as  others,  may,  by  a  sale  or  mort 

328  National  Bank  of  the  Metropolis  v.  Sprague,  20  N.  J.  Eq.  13;  Kirby  v. 
Schoonmaker,  3  Barb.  Ch.  (N,  Y.)  46;  Kennedy  v.  Bank,  23  Hun  (N.  Y.)  494;  In 
re  Kahley,  2  Biss.  383,  Fed.  Gas.  No.  7,593;  Jones,  Chat.  Mortg.  §  44.  A  dissolu- 
tion and  division  of  assets  among  partners  is  not  in  itself  fraudulent,  although  the 
object  is  to  prevent  individual  creditors  of  one  partner  from  levying  on  partner- 
ship property.  Atkins  v.  Saxton,  77  N.  Y.  195.  Money  paid  by  one  partner  to 
his  individual  creditor  in  satisfaction  of  a  just  debt,  and  received  by  the  creditor 
without  knoveledge  that  it  wa«  partnership  money,  could  be  retained  by  the  creditor, 
as  against  the  partnership  or  the  other  partners,  though  derived  from  the  sale  of 
partnership  property.  (Standish  v.  Babcock,  52  N.  J.  Eq.  G28,  29  Atl.  327,  re- 
versed.) Babcock  v.  Standish,  53  N.  J.  Eq.  376,  33  Atl.  385.  In  the  absence  of 
fraud,  an  insolvent  partnership  may,  for  a  fair  consideration,  transfer  its  entire 
property  in  payment  of  an  individual  debt  of  its  members.  Myers  v.  Tyson,  2 
Kan.  App.  464,  43  Pac.  91.  A  chattel  mortgage  given  by  a  firm  to  secure  certain 
of  its  creditors  was  not  rendered  void  as  to  the  creditors  in  general  by  reason  of 
the  fact  that  among  the  preferred  claims  was  a  note  individually  made  by  one  of 
the  partners,  where  the  note  r^resented  money  borrowed  by  such  partner  for  the 
firm,  and  used  in  the  partnership  business,  and  was  in  fact  not  his  individual  in- 
debtedness, but  the  debt  of  the  firm.  Steele  v.  Bank  (Neb.)  66  N.  W.  841.  Where 
the  wives  of  members  of  a  mercantile  firm  buy  goods  of  such  firm,  and  credit  their 
value  on  the  individual  notes  of  their  husbands,  given  for  bona  fide  debts  due  such 
wives,  the  transfer  is  not  void  as  to  the  creditors  of  such  firm,  though  it  is  insol- 
vent. John  V.  Farwell  Co.  v.  Stick  (Iowa)  61  N.  W.  565.  A  transaction  whereby 
one  member  of  a  firm,  without  his  partner's  knowledge,  paid  a  private  debt  out 
of  the  partnership  assets,  is  prima  facie  fraudulent  as  to  the  firm.  Brickett  v. 
Downs,  163  Mass.  70,  39  N.  E.  776.  Where  a  firm  does  business  on  land,  the  title 
10  which  stands  in  one  of  the  partners,  a  bona  fide  mortgagee  for  money  lent  to 
enable  the  owner  to  enter  into  the  partnership  has  a  lien  on  the  property  superior 
to  that  of  the  firm  creditors.  Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078; 
Lamport  v.  Miller,  Id.  A  provision  in  a  chattel  mortgage  executed  by  an  insolvent 
partnership,  that  the  trustee  named  in  the  mortgage  should  sell  all  the  grantor's 
property,  and  pay,  first,  three  creditors  of  the  individual  members  of  the  firm,  was 
void  as  to  the  firm  creditors.     Bannister  v.  Miller  (N.  J.  Ch.)  32  Atl.  lOGG. 

329  Hardy  v.  Mitchell,  67  Ind.  485;  James  v.  Vanzandt,  163  Pa.  St,  171,  29  Atl. 
879;  Jackson  Bank  v.  Dorfey,  72  Miss.  971,  18  South.  456.  If  a  dissolution  is 
not  made  in  good  faith,  but  to  divert  partnership  assets  from  partnership  creditors 
to  individual  creditors,  it  is  fraudulent,  and  partnership  creditors  are  entitled  to 


§    120j  RIGHTS    OF    FIRM    CREDITORS    IN    FIRM    PROPERTY.  279 

gage  of  the  partnership  property,  give  a  preference  to  their  cred- 
itors. If  a  sale  or  mortgage  is  made  in  good  faith,  to  secure  a  bona 
fide  debt  or  debts,  the  transaction  cannot  be  successfully  assailed 
on  the  ground  that  the  creditors  preferred  were  the  individual  cred- 
itors of  the  several  partners.^^"  So  one  partner  may  sell  his  in- 
terest in  the  firm  property  to  his  co-pai'tner,  in  consideration  of  the 
latter  assuming  the  payment  of  the  firm  debts.  The  property  which 
belonged  to  the  firm  thus  becomes  the  individual  property  of  the 

priority  out  of  the  assets,  In  re  Cook,  3  Biss.  122,  Fed.  Cas.  No.  3,150;  Colliiis 
T,  Hood,  4  McLean,  186,  Fed.  Cas.  No.  3,015;  In  re  Byrne,  1  N.  B.  R.  464,  Fed. 
Cas.  No.  2,270;  In  re  Tomes,  19  N.  B.  R.  36,  Fed.  Cas.  No.  14,084;  even  tliough 
the  transfer  was  to  pay  iudJTidual  debts,  Tracy  t.  Walker,  1  Flip.  41,  Fed.  Cas. 
No.  14,129;  CoUinB  v.  Hood,  supra;  Sanderson  v.  Stockdale,  11  Md.  563;  Flack 
▼.  Charron,  29  Md.  311;  Phelps  v.  McNeely,  66  Mo.  554;  Ferson  v.  Monroe,  21 
N.  H.  462.  In  such  case  the  insolvency  of  the  partnership  may  be  considered, 
in  determining  whether  the  dissolution  was  in  good  faith  or  not.  Fnink  v.  Peters, 
9  Ind.  344;  Shimer  v.  Huber,  19  N.  B.  K.  414,  Fed.  Cas.  No.  12,787.  On  disso- 
lution of  the  partnership,  the  firm  creditors  have  the  right  to  have  partnership 
property  applied  to  the  payment  of  the  partnership  debts  in  preference  to  those  of 
the  individual  partner.  Case  v.  Beauregard,  99  U.  S.  119;  Evans  t.  Winston, 
74  Ala.  349;  Warren  v.  Taylor,  60  Ala.  218.  And  this  right  cannot  be  impaired 
by  any  consideration  with  reference  to  the  amount  of  capital  contributed  by  each 
individual  partner.  Wilson  v.  Robertson,  21  N.  Y.  587.  And  debts  contracted  in 
the  name  of  one  partner  may  be  shown  to  be  in  reality  partnership  debts.  Cox  v. 
Piatt,  32  Barb.  (N.  Y.)  126;  Read  v.  Baylies,  35  Mass.  497;  Marks  v.  Hill,  15 
Grat.  (Va.)  400;  Barcroft  v.  Snodgrass,  1  Cold.  (Tenn.)  430;  Siegel  v.  Chidsey,  28 
Pa.  St.  279;  Gwin  v.  Sedley,  5  Ohio  St.  96;  Haben  v.  Harshaw,  49  Wis.  379,  5 
N.  W.  872;  Schaeffer  v.  Fithian,  17  Ind.  463;  Wait  v.  Bank,  19  N.  B.  R.  500, 
Fed.  Cas.  No.  17,043.  But,  where  such  debt  was  incurred  by  consent  or  privity 
of  the  other  partner,  proof  of  joint  creditors  against  the  8ei>arate  estate,  in  com- 
petition with  the  separate  creditors,  will  not  be  admitted.  In  re  Lloyd,  22  Fed. 
91;  In  re  McEwen,  12  N.  B.  R.  11,  Fed.  Cas.  No.  8,783;  In  re  McLean,  15  N.  B. 
R.  333,  Fed.  Cas.  No.  8,879;  In  re  May,  19  N.  B.  R.  101,  Fed.  Cas.  No.  9,328.  A 
transfer  of  firm  property  to  pay  the  separate  debts  of  one  partner  is  a  voluntary 
conveyance;  and,  where  the  firm  is  insolvent,  it  is  void.  Geortner  v.  Canajoharie, 
2  Barb.  (N.  Y.)  625;  Burtus  v.  Tisdall,  4  Barb.  (N.  Y.)  571;  Dart  v.  Bank,  27 
Barb.  (N.  Y.)  337;  Walsh  v.  Kelly,  42  Barb.  (N.  Y.)  98,  27  How.  Prac.  (N.  Y.) 
359;  Elliot  v.  Stevens,  38  N.  H.  311;  Ferson  v.  Monroe,  21  N.  H.  462;  Wilson  v. 
Robertson,  21  N.  Y.  587;  Hartley  v.  White,  94  Pa.  St.  31.  But  see  Schaeffer  v. 
Fithian,  supra;  McDonald  v.  Beach,  2  Blackf.  (Ind.)  55;  Schmidlapp  v.  Currie,  55 
Miss.  597;  National  Bank  v.  Sprague,  20  N.  J.  Eq.  13;  Sigler  v.  Bank,  8  Ohio  St. 
511;  Ex  parte  Lodge,  1  Ves.  Jr.  166. 
««o  Fisher  t.  Syfers.  109  Ind.  514,  10  N.  B.  306. 


280  RIGHTS    AND    LIABILITIES    AS   TO    THIRD    PERSONS.  (Ch.   6 

continuing  partner,  and  the  firm  creditors  have  no  priority  in  such 
property  unless  the  retiring  partner  retained  his  lien  thereon.  The 
validity  of  such  transactions  depends  on  the  good  faith  of  the  par- 
ties,^^^  and  the  fact  that  the  firm  is  insolvent  is  not  enough,  alone, 
to  show  want  of  good  faith,  unless  the  insolvency  was  known  to  the 
partners  at  the  time  of  the  transfer.  On  all  these  points  there  is 
considerable  conflict,  at  least  in  the  dicta  of  the  judges;  but  nearly 
all  are  in  harmony  with  the  principle  that,  if  the  bona  fides  of  the 
transaction  is  impeached,  or  if  the  equity  is  retained  by  agreement, 
express  or  implied,  then  the  creditors  can  enforce  such  equity."^ 
The  conflict  chiefly  arises  in  regard  to  what  circumstances  or  facts 
are  sufficient  to  impeach  the  good  faith  of  the  transaction,  and  in 
respect  to  what  is  suflBcient  to  show  a  contract  that  the  partnership 
debts  shall  be  paid  out  of  the  partnership  assets,  and  impress  a  trust 
upon  such  assets  for  that  purpose.*" 

SAME— PARTNERS  IN  FIRM  PROPERTY. 

121.  A  partner's  rights  in  the  partnership  property  are 
subordinate  to  the  rights  of  firm  creditors,  except 

EXCEPTIONS — (a)  When  his  separate  property  has  been 
fraudulently  dealt  "with  as  the  property  of  the  firm 
(p.  282). 

(b)  When  he  carries  on  a  distinct  trade  in  respect  to 
wliich  the  firm  has  become  his  debtor  (p.  283). 

Cc)  When  he  has  been  discharged,  in  bankruptcy  or  oth- 
ervcrise,  from  his  firm  liability,  and  has  afterwards 
become  a  creditor  of  the  firm  (p.  283). 

A  partner  in  a  bankrupt  firm  cannot  prove  in  competition  with 
the  creditors  of  the  firm.      They  are,  in  fact,  his  own  creditors,  and 

881  Ketchum  v.  Durkee,  1  Barb.  Ch.  (N.  Y.)  480;  Stanton  v.  Westover,  101  N. 
Y.  265,  4  N.  E.  529;  Howe  v.  Lawrence,  9  Cnsh.  (Mass.)  553;  Fulton  v.  Hughes, 
63  Miss.  61;  Allen  v.  Center  VaUey  Co.,  21  Conn.  130;  Douglass  v.  Alder  (Utah) 
44  Pac.  706. 

««2  Olson  V.  Morrison,  29  Mich.  395;  Thayer  v.  Humphrey,  91  Wis.  276,  64  N. 
W.  1007;  Bulger  v.  Rosa,  119  N.  Y.  459,  24  N.  E.  853;  Darby  v.  Gilligan,  83  W. 
Va,  246,  10  S.  E.  400. 

•  8  8  Thayer  r.  Humphrey,  91  Wis.  276,  64  N.  W.  1007. 


§    121)  RIGHTS    OF    PARTNERS    IN    FIRM    PROrERTY.  281 

he  cannot  be  permitted  to  diminish  the  partnership  assets  to  the 
prejudice  of  those  who  are  not  only  creditors  of  the  firm  but  also 
of  himself."*  If,  therefore,  a  partner  is  a  creditor  of  the  firm,  nei- 
ther he  nor  his  separate  creditors  (for  they  are  in  no  better  position 
than  himself)  can  compete  with  the  joint  creditors  as  against  the 
joint  estate."'  Again,  as  the  estate  of  a  deceased  partner  is  lia- 
ble for  the  debts  of  the  firm,  it  follows  that,  so  long  as  such  liabil- 
ity exists,  his  executors  cannot  prove  against  the  joint  estate  in  the 
hands  of  the  surviving  partners  for  the  amount  due  from  them  to  his 

884  Campbell  v.  McGuire,  58  111.  App.  37;  Ex  parte  Rawson,  Jac,  274,  279;  Ex 
parte  Sillitoe,  1  Glyn  &  J.  382;  Ex  parte  Hargreaves,  1  Cox,  Ch.  441;  Ex  parte 
Reeve,  9  Ves.  590.  An  agreement  between  partners  to  pay  a  retiring  partner  the 
capital  contributed  by  him  to  the  firm,  if  made  in  good  faith,  and  without  injury 
to  the  then  creditors,  does  not  create  a  fictitious  claim  against  the  firm.  Baily  v. 
Hornthal,  89  Hun,  514,  35  N.  Y.  Supp.  437.  A  firm  whose  members  own  equal 
undivided  interests  in  its  real  estate  may  allow  one  member  to  retire  and  take  his 
portion  of  the  real  estate  as  security  for  a  debt  due  him  from  the  firm.  Childs  v. 
Pellett,  102  Mich.  558,  61  N.  W.  54.  See,  also,  Spieker  v.  Lash,  102  Cal.  38,  36 
Pac.  362.  Where  members  of  a  firm  mortgage  the  firm  property  to  secure  a  cred- 
itor of  another  firm,  of  which  they  are  sole  members,  such  mortgage  is  a  fraud  on 
the  creditors  of  the  fijst-named  firm,  and  the  rights  of  the  mortgagee  are  subordi 
nate  to  those  of  such  creditors.  Bonwit  v.  Heyman,  43  Neb.  537,  61  N.  W.  710. 
A  firm  creditor  cannot  set  aside,  as  fraudulent,  a  voluntary  conveyance  by  ouo 
of  the  partners  of  his  individual  lands  to  his  wife,  unless  there  are  no  firm  assets, 
or  an  insufEciency  thereof,  and  no  individual  creditors,  or  his  individual  property  is 
more  than  sufficient  to  pay  them  in  full,  unless  the  firm  creditor  is  also  an  indi- 
vidual creditor.  Hull  v.  William  Deering  &  Co.,  80  Md.  424,  31  Atl.  416.  A 
trust  deed  executed  by  a  member  of  an  insolvent  firm,  on  his  own  property,  to 
secure  the  individual  debt  of  his  partner,  for  which  he  was  not  bound,  is  fraudulent 
as  to  creditors  of  the  firm,  and  will  be  set  aside.  Erb  v.  West  (Miss.)  19  South. 
829.  Where  the  profits  of  a  banking  firm  were  divided,  and  credited  to  the  per- 
sonal account  of  each  partner,  an  assignment  by  one  of  the  partners  of  his  share 
BO  credited  as  security  for  a  personal  debt  is  valid  as  against  the  firm  creditors, 
where  the  firm  was  solvent  at  the  time  of  the  assignment.  Bingham  v.  Tuttle,  82 
Hun,  51,  31  N.  Y.  Supp.  68. 

880  Amsinck  v.  Bean,  22  Wall.  395;  Houseal's  Appeal,  45  Pa.  St  484;  In  re 
Rieser,  19  Hun  (N.  Y.)  202;  Rodgers  v.  Meranda,  7  Ohio  St.  179.  Cf.  Childs  v. 
Pellett,  102  Mich.  558,  61  N.  W.  &4.  Individual  partners  can  claim  no  exemption 
from  execution  upon  property  once  placed  by  them  in  the  partnership  stock,  and  so 
remaining.  It  is  joint  property,  and  the  right  of  creditors  accrues  to  have  it  ap- 
plied to  the  payment  of  their  debts,  the  partnership  having  become  bankrupt.  In 
re  Corbett,  5  Sawy.  206,  Fed.  Cas.  No.  3,220. 


282  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   G 

estate.'"  But,  if  those  debts  are  paid,  or  the  estate  of  the  de- 
ceased is  relieved  from  them,  such  proof  is  admissible,^  ^^  except  in 
respect  of  assets  properly  brought  into  or  left  in  the  business  by  the 
executors  as  part  of  the  capital  of  the  deceased.  No  proof,  how- 
ever, in  respect  of  such  assets  is  admissible  against  the  joint  estate 
of  the  surviving  partners,  until  all  their  joint  debts,  contracted  as 
well  before  as  after  the  death  of  the  deceased,  are  paid.^^* 

Fraud. 

If  separate  property  of  one  partner  has  been  fraudulently  con- 
verted by  his  co-partners  to  the  use  of  the  firm,  such  property  must 
be  treated  as  the  separate  estate  of  the  defrauded  partner;  and 
proof  on  his  behalf  (or  rather  on  behalf  of  his  separate  estate)  is 
therefore  allowed,  in  respect  of  such  property,  against  the  joint  es- 
tate, and  in  competition  with  the  joint  creditors.""  Upon  precisely 
the  same  principle,  if  a  partner  has  fraudulently  converted  property 
of  the  firm  to  his  own  use,  proof  on  behalf  of  the  joint  estate  is  al- 
lowed, in  respect  of  such  property,  against  his  separate  estate,  and 
in  competition  with  his  separate  creditors.'*" 

Assets  of  a  deceased  partner,  brought  into  the  business  by  his 
executor  in  breach  of  trust,  do  not  form  part  of  the  joint  estate  of 
the  surviving  partners,  and  may  be  the  subject  of  proof  against  that 
estate,  not  only  in  competition  with  those  creditors  who  have  be 
come  such  since  the  death  of  the  deceased,  but  also  in  competition 
with  those  whose  debts  accrued  in  his  lifetime.'*^  As  regards  the 
last,  the  proof  is  exceptional,  but  is  allowed  for  the  same  reason  as 
similar  proof  is  allowed  where  separate  estate  of  one  partner  has 
been  fraudulently  dealt  with  as  property  of  the  firm.'** 

SS6  Nanson  v.  Gordon,  1  App.  Caa.  195;    Ex  parte  Blythe,  16  Ch.  Div.  620. 

887  Ex  parte  Edmonds,  4  De  Gex,  F.  &  J.  488;  Ex  parte  Andrews,  25  Ch.  Div. 
505. 

838  Ex  parte  Butterfield,  De  Gex,  570;  Ex  parte  Garland,  10  Ves.  110;  Ex  parte 
Corbridge,  4  Ch.  Div.  246. 

33  9  Rodgers  v.  Meranda,  7  Ohio  St.  179,  194;  EIi  parte  Harris,  1  Rose,  437;  Bz 
parte  Sillitoe,  1  Glyn.  &  J.  382. 

840  Ex  parte  Lodge,  1  Ves.  Jr.  166. 

841  Ex  parte  Westcott,  9  Ch.  App.  626;    Ex  parte  Garland,  10  Ves.  110. 
«4  2  Supra,  note  339. 


§    122)         RIGHTS    OF    SEPARATE    CREDITORS    IN    FIRM    PROPERTY.  283 

Sam^. — Distinct  Trades. 

If  one  of  two  firms,  carrying  on  distinct  trades,  becomes  creditor 
of  tlie  other  in  the  ordinary  way  of  their  trade,  the  creditor  firm 
may  prove  against  the  joint  estate  of  the  debtor  firm,  in  competi- 
tion with  its  other  joint  creditors,  although  one  or  more  persons 
may  be  partners  in  both  firms.^*^  If  neither  firm  contains  the 
other,  e.  g.  if  one  firm  is  A.  and  B.,  and  the  other  firm  is  A.  and  C 
either  may  ranlc  as  a  joint  creditor  of  the  other,  because  the  cred- 
itors of  the  one  are  not  creditors  of  the  other.'**  The  exception 
now  under  discussion  is,  however,  only  allowed  provided  two  things 
concur,  viz.:  First,  there  must  be  two  distinct  trades;  and,  sec- 
ondly, the  debt  sought  to  be  proved  must  have  arisen  from  deal- 
ings between  trade  and  trade  in  the  ordinary  way  of  business.'*' 

Same — Discharge. 

When  a  partner  has  obtained  his  order  of  discharge  in  bank- 
ruptcy, or  has  been  otherwise  discharged  from  the  joint  debts,  he 
is  no  longer  a  debtor  to  the  creditors  of  the  firm,  and  does  not,  there- 
fore, fall  within  the  rule  which  precludes  a  person  from  competing 
with  his  own  creditors.'*' 

SAME— SEPARATE  CREDITORS  IN  FIRM  PROPERTY. 

122.  Separate  creditors  have  no  rights  in  firm  property 
until  the  firm  creditors  have  been  paid  and  the 
liens  of  the  other  partners  discharged. 

The  lien  which  each  partner  has  upon  the  assets  of  the  firm  must 
be  satisfied  before  any  part  of  the  joint  estate  can  be  divided  among 
the  members  of  the  firm,  or,  which  comes  to  the  same  thing,  be 
carried  to  the  account  of  their  respective  separate  estates.  There- 
fore, after  the  joint  debts  of  the  firm  have  been  paid,  with  inter- 

843  Houseal's  Appeal.  45  Pa.  St.  484;  In  re  Lane,  2  Low.  333,  Fed.  Cas.  No. 
8.044;  In  re  Buckhause,  2  Low.  331,  Fed.  Cas.  No.  2,086;  Ex  parte  !$t.  Barbe,  11 
Yes.  413.      Contra,  Somerset  Potters  Works  v.  Minot,  10  Cush.  (Mass.)  592. 

«44  Ex  parte  Thompson,  3  Deac.  &  C.  612. 

•46  Ex  parte  Williams,  3  Mont.,  D.  &  D.  433;  Ex  parte  Hargreaves,  1  Cox,  Ch 
440;    Ex  parte  Sillitoe,  1  Glyn.  &  J.  374,  382. 

84  6  Ex  parte  Smith,  14  Q.  B.  Div.  394;  Ex  parte  Atkins,  Buck,  479;  2  Bates, 
Partn.  I  837. 


284 


RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 


est  to  the  date  of  the  receiving  order,"^  the  surplus  of  the  joint  es- 
tate must  next  be  applied  in  satisfaction  of  the  liens  of  the  individ- 
ual partners  upon  it;'*^  and  it  is  the  ultimate  surplus  only  which 
is  to  be  di\ided  among  the  partners,  or  their  respective  separate 
estates,  in  proportion  to  their  respective  shares  in  the  assets  of  the 
firm.  It  is  hardly  necessary  to  observe  that  a  lien  existing  in 
favor  of  one  partner  increases  his  separate  estate,  and  confers  upon 
his  separate  creditors  a  right  to  prove  against  the  joint  estate  in 
preference  to  the  separate  creditors  of  the  other  partners,  who  have 
no  such  lien.'*"  If  the  joint  estate  is  not  sufficient  to  satisfy  the 
lien,  the  deficiency  becomes  provable  against  the  separate  estates 
of  the  indebted  partners."*"  The  joint  debts  being  paid,  and  the 
liens  of  the  individual  partners  on  the  partnership  assets  being  sat- 
isfied, the  surplus  of  the  joint  estate  becomes  divisible  among  the 
respective  separate  estates  of  the  partners  in  proportion  to  their 
respective  shares  in  the  partnership  property.  The  surplus  of  the 
joint  estate,  having  been  thus  distributed,  loses  its  character  of  joint 
estate,  and  becomes,  to  all  intents  and  purposes,  separate  estate  of 
the  partners  to  whose  credit  it  is  carried.  If  any  joint  estate  is 
carried  to  a  separate  estate  before  the  joint  debts  are  paid  and  the 
partners'  liens  are  satisfied,  such  joint  estate  will  be  ordered  to  be 
restored."^ 

«*T  Ex  parte  Findlay,  17  Ch.   Div.  334. 

8*8  Ex  parte  King,  17  Ves.  115;  Ex  parte  Reid,  2  Rose,  84;  Ex  parte  Reeve, 
9  Ves.  588;  Ex  parte  Terrell,  Buck,  345;  Fereday  v.  Wightwick,  Tarn.  250; 
liolderness  v.  Sbackels,  8  Barn.  &  C.  612. 

84»  Ex  parte  Reid,  2  Rose,  84;    Ex  parte  King,  17  Ves.  115. 

800  Ex  parte  Watson,  Buck,  449;  Ex  parte  Terrell,  Id.  345;  Ex  parte  King, 
17  Ves.  115. 

8  61  Allen  V.  Wells,  22  Pick.  (Mass.)  450;  Fern  ▼.  Cushing.  4  Gush.  (Mass.)  357; 
Ex  parte  Lanfear,  1  Rose,  442. 


§    123)       lilGHTS   OF  SEPARATE    CREDITORS    IN    SEPARATE    PROPERTY.       285 


SAME— SEPARATE  CREDITORS  IN  SEPARATE  PROPERTY. 

123.  Separate  creditors  of  a  partner  are  entitled  to  prior- 
ity of  payment  out  of  the  separate  property  of  that 
partner. 

The  rule  as  above  stated  is  supported  by  the  great  weight  of 
authority,^ ''^  though  there  are  some  contra  cases.^^^  The  history 
of  the  rule,  and  the  reasons  for  and  against  it,  are  reviewed  in 
Rodgers  v.  Jleranda.'"*  In  that  case  Bartley,  C.  J.,  says:  "And 
this  rule,  which  gives  the  partnership  creditors  a  preference  in  the 
partnership  effects,  would  seem  to  produce,  in  equity,  a  correspond- 
ing and  correlative  rule,  giving  a  preference  to  the  individual  cred 
itors  of  a  partner  in  his  separate  property;  so  that  partnership  cred 
itOi's  can,  in  equity,  only  look  to  the  surplus  of  the  separate  prop- 
erty of  a  partner,  after  the  payment  of  his  individual  debts,  and. 
on  the  other  hand,  the  individual  creditors  of  a  partner  can,  in  like 
manner,  only  claim  distribution  from  the  debtor's  interest  in  the 
surplus  of  the  joint  fund  after  the  satisfaction  of  the  partnership 
creditors.  The  correctness  of  this  rule,  however,  has  been  much 
controverted;  and  there  has  not  been  always  a  perfect  concurrence 
in  the  reasons  assigned  for  it  by  those  courts  which  have  adhered  to 
it.  By  some,  it  has  been  said  to  be  an  arbitrary  rule,  established 
from  considerations  of  convenience;  by  others,  that  it  rests  on 
the  basis  that  a  primary  liability  attaches  to  the  fund  on  which  the 
credit  was  given, — that   in   contracts  with  a  partnership  credit  is 

»82  In  re  Dunkerson,  4  Biss.  277,  Fed.  Gas.  No.  4,158;  In  re  Estes,  3  Fed. 
134;  Union  Nat.  Bank  ot  Chicago  v.  Bank  of  Commerce  of  St.  Louis,  94  111. 
271;  Mclntire  t.  Yates,  104  111.  491;  Miller  v.  Clarke,  37  Iowa,  325;  Trustees 
of  Catskill  Bank  v.  H<x)per,  5  Gray  (Mass.)  574;  Bush  v.  Clark,  127  Mass. 
Ill;  Nutting  v.  Ashcroft,  101  Mass.  300;  Meech  v.  Allen,  17  N.  Y.  300;  Heck- 
man  V.  Messinger,  49  Pa.  St.  465;  Lord  v.  Devendorf,  54  Wis.  491,  11  N.  W. 
903;    Ex  parte  Cook,  2  P.  Wms.  500. 

868  Camp  V.  Grant,  21  Conn.  41;  Pearce  v.  Cooke,  13  R.  I.  184;  White  v. 
Dougherty,  Mart.  &  Y.  (Tenn.)  309;  Bardwell  v.  I'erry,  19  Vt.  292;  Ex  parte 
Hodgson,  2  Brown,  Ch.  5.  For  a  peculiar  rule  in  Kentucky,  see  Fayette  Nat. 
Bank  of  Lexington  v,  Kenney's  Assignee,  79  Ky.  133;  Northem  Bank  of  Ken- 
tucky V.  Keizer,  2  Duv.  (Ky.)  169. 

»»*  7  Ohio  St,  179,  181. 


286  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.   6 

piven  on  the  supposed  responsibility  of  the  firm,  while  in  contracts 
mth  a  partner  as  an  individual  reliance  is  supposed  to  be  placed  on 
his  separate  responsibility;'"^  and,  again,  others  have  assi^ed  as 
a  reason  for  the  rule  that  the  joint  estate  is  supposed  to  be  benefited 
to  the  extent  of  every  credit  which  is  given  to  the  firm,  and  that  the 
separate  estate  is,  in  like  manner,  presumed  to  be  enlarged  by  the 
debts  contracted  by  the  individual  partner,  and  that  there  is,  con 
sequently,  a  clear  equity  in  confining  the  creditors,  as  to  prefer 
ences,  to  each  estate,  respectively,  which  has  been  thus  benefited 
by  their  transactions.""  But  these  reasons  are  not  entirely  sat- 
isfactory. •  •  ♦  For,  leaving  the  rule  to  stand  which  gives  th»» 
preference  to  the  joint  creditors  in  the  partnership  property,  per 
feet  equality  between  the  joint  and  individual  creditors  is,  perhaps, 
rarely  attainable.  That  it  is,  however,  more  equal  and  just,  as  a 
general  rule,  than  any  other  which  can  be  devised,  consistently  with 
the  preference  to  the  partnership  creditors  in  the  joint  estate,  can 
not  be  successfully  controverted.  It  originated  as  a  consequence  of 
the  rule  of  priority  of  j)artn('r5Jliip  rroditors  in  the  joint  estate,  anrl. 
for  tlie  purposes  of  justice,  became  necessary  as  a  correlative 
rule."  «" 

»88  3  Kent,  Comm.  65. 

«B«  M'Culloh  V.  Dnshiell's  Adtn'r.  1   Ilnr.  &  (}.  (Md.)  <)«. 

887  "The  theories  which  have  been  sucKe-sted  to  flocount  for  the  ronrse  of  din- 
tribution  in  equity  do  not  RO  to  the  source  of  the  change,  and  explain  the  cause 
which  brouRht  about  the  departure  from  the  common-law  system.  The  notion 
of  credit,  that,  as  the  joint  creditors  relied  upon  firm  assets,  the  separate  cred- 
itors looked  to  the  separate  estates  for  payment,  is  an  assumption.  It  con- 
tradicts the  experience  which  imputes  to  every  man  a  knowledge  of  the  law. 
The  credit  will  depend  upon  the  estate  which  the  debtor  had.  The  partners  have 
joint  and  separate  estates,  which  are  both  subject  to  firm  debts.  The  credit 
would,  of  course,  be  given  in  reliance  upon  both  estates.  The  partner  has  a 
resulting  interest  in  the  firm  after  all  its  debts  are  paid,  and  his  separate  estate, 
which  is  also  subject  to  the  firm  debts.  His  creditor  could  expect  nothing  from 
the  partner's  share  until  the  firm  creditors  had  been  satisfied,  and  he  could  only 
share  the  separate  estate  with  them  unless  insolvency  supervened,  which  would 
give  him  a  paramount  title  to  the  separate  fund.  The  credit  given  to  a  debtor 
is  not  the  cause  of  his  estate,  but  a  consequence  of  his  possessing  the  means  to 
pay  the  debt."     J.  Pars.  Partn.  191. 


§    124)         RIGHTS    OF    FIRM    CREDITORS    IN    SEPARATE    PROPERTY. 


287 


Applying  Separate  Property  to  Firm  Debts. 

''Any  attempt,  by  sale  or  otherwise,  with  notice,  to  divert  the  sep- 
arate property  or  funds  of  the  individual  debtor  from  the  payment 
of  his  separate  debts  to  the  discharge  of  a  partnership  liability  of 
the  firm  of  which  he  may  be  a  member,  is,  in  principle,  a  fraud  on 
the  rights  of  a  creditor  of  the  individual  debtor,  and  void  as  to 
him."  "**  There  are,  however,  cases  which  deny  this  to  be  the  rule. 
The  same  conflict  exists  here  as  in  the  ease,  already  considered,  of 
the  conversion  of  firm  into  separate  property. "*• 

SAME— FIRM  CREDITORS  IN  SEPARATE  PROPERTY. 

124.  The  rights  of  firm  creditors  in  the  separate  property 
of  the   partners   are    subordinate    to   the   rights    of 
separate  creditors,  except 
EXCEPTIONS— (a)    Where   there   is   no  joint   estate,  or 
living  solvent  partner  (p.  2S8). 

(b)  Where   the   property   of  the   firm   has   been  fraudu- 

lently converted  (p.  239). 

(c)  Where  the  partner  has  become    indebted  to  the  firm 

in   respect  to   a   separate  trade   carried   on  by  him 

(p.  L'yo). 

(d)  In  England,  where  a  firm  creditor  is  himself  the  pe- 

titioner (p.  291). 

(e)  Where  the  government  is  a  firm  creditor  (p.  292). 

(f)  Where  the  firm   creditor   has  acquired  a  legal  prior- 

ity in  the  separate  property  (p.  292). 

As  seen  in  the  last  section,  partnership  creditors  are  postponed 
to  the  individual  creditors  of  the  partners  in  the  distribution  of  the 
individual  property  of  the  partners.      After  payment  of  the  separate 

8  68  Holton  V.  Holton,  40  N.  H.  77,  Ames,  Gas.  Partn.  p.  332;  Jarvis  v.  Brooks, 
3  Foat.  (N.  H.)  136;  Crockett  v.  Grain,  33  N.  H.  542;  Ferson  v.  Monroe,  1 
Fost  (N.  U.)  4G2;  Lovejoy  v.  Bowers,  11  N.  H.  404;  French  v.  Lovejoy,  lis 
N.   H.  458;    Tappan  ▼.  Blaisdell,  5  N.  H.  190;    Morrison  v.   Blodgett,  8  N.   H. 

238,  248. 

869  Newman  v.  Bagley,  16  Pick,  (Mass.)  570;  Mclntire  t.  Yates,  104  111.  491; 
O'Neil  T.  Salmon,  25  How.  Prac.   (N.  Y.)  246,  252;    Uaynes  v.  Brooks,   17  Abb. 


288  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.  6 

creditors  of  each  partner,'""*  the  surplus  of  his  estate  is  carried  to 
the  credit  of  the  joint  estate;"**  and,  if  the  partner  is  a  member 
of  several  bankrupt  firms,  the  surplus  of  his  separate  estate  must 
be  divided  among  their  respective  joint  estates,  in  proportion  to  the 
amount  of  debts  proved  against  them,  respectively.'" 

Exceptions — No  Joint  Estate^  etc. 

If,  in  the  case  of  a  bankrupt  firm,  there  is  no  joint  estate,  the 
joint  creditors  are  entitled  to  rank  as  separate  creditors  against  the 
separate  estates  of  the  individual  partners.'"  80,  if  one  partner 
only  is  bankrupt,  the  creditors  of  the  firm  are  entitled  to  rank  aa 
separate  creditors  against  the  separate  estate  of  the  bankrupt,  if 
there  is  no  joint  estate,"*  and  if  there  is  no  solvent  ostensible  part- 

N.  O,  (N.  Y.)  152,  100;  Crooker  v.  Crocker,  52  Me.  207;  (lareden  ▼.  Carson, 
0  Rich.  Eq.  (S.  C.)  2.")li;  Straus  v.  Kirngood.  21  Grat.  (Va.)  5S4.  587.  And  see 
Winslow  V.  Wallace,   116  Ind.  317,  17  N.  E.  D23. 

860  Amsinck  v.  Bean,  'I'l  Wall.  39r>.  401;  In  re  Hamilton,  1  Fed.  800.  810; 
Cowan  T.  Gill,  11  Lea  (Tenn.)  074.  That  8Pi)arate  creditors  are  not  entitled  to 
interest  until  joint  creditors  are  paid,  see  V^\  parte  Clarke,  4  Ves.  6T7;  Thomaa 
T.  Miiiot,  10  Gr.iy  (.Mass.)  203;    In  re  Berrian,  0  I'.eu.  2D7,  Fed.  Cas.  No.  1,351. 

»8i  Ex  parte  Wood,  2  Mont.,  I).  &  D.  283.  Firm  creditors  are  permitted  to 
prove  tlieir  claims  against  the  separate  estate  for  the  purpose  of  keeping  ac- 
counts, but  not  to  receive  a  dividend  until  the  separate  creditors  are  paid.  Ex 
parte  Clnj,  6  Ves.  813;    Putton  v.  Morrison,  17  Ves.   193. 

882  Ex  parte  Franklyn.  Buck,  332. 

888  In  re  .Tewett.  1  N.  B.  H.  491,  Fed.  Caa.  No.  7.304;  In  re  Downing.  3  N. 
B.  R.  718.  Fed.  Cas.  No.  4,044;  In  re  Knight,  2  Bias.  518,  Fed.  Cas.  No.  7.880; 
In  re  McEwen,  6  Biss.  294,  Fed.  Cas.  No.  8.783;  In  re  Litchfield,  6  Fed.  47; 
In  re  Blunier,  12  Fed.  489;  Pahlniau  v.  (Jraves,  26  III.  405;  Curtis  v.  Wood- 
ward, 58  Wis.  499,  17  N.  W.  328;  D'Invilliers'  Estate.  13  Phila.  (Pa.)  302; 
Brock  V.  Bateman,  25  Ohio  St.  609;  Bx  parte  Hill,  2  Bos.  &  P.  (N.  R.)  191, 
note  a;  Ex  parte  Hayden,  1  Brown,  Ch.  454;  Ex  parte  Peake,  2  Ruse,  54. 
But  see.  contra,  Somerset  Potters  Works  v.  Minot,  10  Cush.  (Mass.)  .^)92;  Howe 
V.  Lawrence,  9  Cush.  (Mass.)  553;  Murrill  v.  Neill,  8  How.  414,  427;  Weyer 
V.  Thornburgh,  15  Ind.  124.  Where  one  partner  takes  the  firm  assets,  and 
agrees  to  pay  the  firm  debts,  the  partnership  creditors  may  prove  against  his 
estate,  and  share  pari  passu  with  the  separate  creditors.  In  re  Lloyd.  22  Fed.  90, 
see  Smith  v.  Spencer,  73  Ala.  299;  as  a  separate  creditor  cannot  be  injured  by 
a  transfer  of  one  partner's  interest  in  the  partnership  property  to  his  co-partner, 
in  consideration  of  the  grantee's  assuming  the  liability  of  the  firm,  Griffin  v. 
Cranston,  10  Bosw.  (N.  Y.)  1,  1  Bosw.  (N.  Y.)  281. 

««♦  Ex  parte  Hayden,  1  Brown,  Ch.  45;  Ex  parte  Sadler,  15  Ves.  52;  Ex 
parte  Bradshaw,  1  Glyn  &  J.  99. 


§    124)         RIGHTS    OF    FIRM    CREDITORS    IN    SEPARATE    PROPERTY.  289 

ner,»"  or,  at  all  events,  none  in  the  country.*"  The  fact  that  the 
estate  of  a  deceased  partner  is  solvent  does  not  deprive  the  joint 
creditor  of  his  right  against  the  separate  estate  of  the  bankrupt.'" 
If  there  is  any  joint  estate,  however  small,  the  joint  creditors  will 
not  be  permitted  to  rank  pari  passu  with  separate  creditors  against 
the  separate  estate.'"  I>ut  where  one  partner  only  is  bankrupt, 
nothing  can  be  treated  as  joint  estate  by  reason  only  of  the  doctrines 
of  reputed  o\\'nership; »"  iind  joint  property  which  is  pledged  for 
more  than  its  value,  or  wliich,  for  any  other  reason,  cannot  to  any 
extent  be  made  available  for  the  benefit  of  the  creditors  of  the  firm, 
is  treated,  with  reference  to  the  rule  in  question,  as  having  no  exist- 
ence.*^"  When  one  partner  is  dead,  the  joint  creditors  must  pro 
eeed  against  the  survivor,  unless  he  is  insolvent."'  The  rule  In 
England  is  otherwise,  and  firm  creditors  may  proceed  in  equity 
against  ilic  estate  of  tlu-  deceased  partner  even  when  there  are 
sufiicient  firm  assets  in  the  hands  of  the  survivor."" 

Same — Fraud. 

It  has  already  been  seen  tiiat,  if  a  jmrtncr's  separate  property  has 
bet^n  fraudulently  convert«Hl  by  his  co-partners  to  the  use  of  the  firm, 
which  becomes  bankrupt,  the  property  so  converted  cannot  be  treat 
ed  as  part  of  the  joint  estate,  but  must  be  placed  to  the  separate 

««o  KenBinjfton  t.  Taylor,  H  Ves.  447.  But  cf.  Ex  purtp  Jauson,  3  Madd. 
229. 

•  «•  Ex  parte  rinkerton,  6  Vos.  814,  note. 
««T  Kendall  v.  Hamilton,  4   .\pp.  Cas.  ^04. 

8«8  In  re  Riocum,  Fed.  Cas.  .\...  12.9r»l;  In  re  McEwen,  6  Biss.  294.  Fed.  Cas. 
No.  8,783;  Brock  t.  Bateman.  2.")  Ohio  St.  609;  Harris  v.  Peabo<l.v,  73  Mc  2G2; 
Lodse  V.  Prichard,  1  De  (Jex,  .1.  &  S.  610.  See,  for  a  hard  case.  lu  re  Marwick, 
2  Ware,  229,  Fed.  Cas.  No.  9,181. 

S89  See  Ex  parte  Taylor,  2  Mont.,  D.  &  D.  753. 

•  TO  Ex  parte  Hill.  2  Bos.  &  P.  (N.  R.)  191,  note;  Ex  parte  Peake,  2  Rose,  M. 
If  the  joint  property  will  all  lu-  consumed  in  costs,  the  joint  creditors  can  s'lare 
in  the  separate  estate.  In  re  M.  Ewen,  6  Biss.  294,  Fed.  Cas.  No.  8,783.  Contra, 
Ex  parte  Kennedy.  2  De  Gex.  M.  &  G.  228. 

3T1  Voorhis  v.  Childs'  Ex'r.  17  N.  Y.  354;  Grant  ▼.  Shnrter,  1  Wend.  (N.  Y.) 
148;  LawTence  t.  Trustees,  2  Denio  (N.  Y.)  577;  Caldwell  t.  Stileman,  1  Rawle 
(Pa.)  212;    Van  Reimsdyk  v.  Kane.  1  Gall.  371.  385,  Fed.  Cas.  No.  16,871. 

ST 2  Wilkinson   v.    Uendirson.   1    Mylne   &   K.   582.      Cf.   Wilmer  T.   Currej,   2 
De  Gex    &  S.  347;    Beresford  t.  Browning,  1  Ch.  Div.  30. 
GEO.PART.— 19 


290  RIGHTS    AND    LIABILITIES   AS    TO    THIRD    PERSONS.  (Ch.    6 

account  of  the  defrauded  partner.'^'  Upon  the  same  principle,  if 
a  partner  has  fraudulently  converted  to  his  own  use  property  which 
in  truth  belongs  to  the  firm,  such  property  cannot  be  treated  as  part 
of  his  separate  estate,  but  forms  part  of  the  joint  estate  of  the  firm. 
Hence,  as,  in  the  former  case,  proof  on  behalf  of  the  separate  estate 
is  admitted  against  the  joint  estate,  so,  in  the  latter  case,  if  the  firm 
is  bankrupt,  proof  on  behalf  of  the  joint  estate  is  admitted  against 
the  separate  estate,^'^  although  that  estate  may  not,  in  the  result, 
be  greater  by  reason  of  the  fraud.^^"^  Moreover,  if  the  firm  is  not 
bankrupt,  proof  on  behalf  of  the  solvent  partners  is  admitted  against 
the  estate  of  their  bankrupt  co-partner;  and  in  this  case  the  solvent 
partners  rank  as  separate  creditors,  although  the  property  fraudu- 
lently appropriated  by  the  bankrupt  belonged  not  to  them  exclu- 
sively, but  to  them  jointly  with  himself.*^' 

Whether,  in  any  particular  instance,  there  has  been  a  fraudulent 
misappropriation  of  the  partnership  property,  or  not,  must,  of  course, 
be  determined  by  the  facts  of  each  ease.  It  may,  however,  be  ob- 
served that  the  mere  circumstance  tiiat  one  partner  is  indebted  to 
the  firm  is  no  proof  of  fraud;  and,  even  if  he  has  acted  in  violation 
of  the  articles  of  partnership,  it  may  be  found  that  those  articles 
have  by  common  consent  been  habitually  ignored.  To  bring  a 
case  within  the  exception  now  under  consideration,  the  individual 
partner  must  in  effect  have  stolen  the  property  of  the  firm,  and  his 
breach  of  good  faith  must  not  have  been  acquiesced  in  or  condoned 
by  his  co-partners.^^^  Any  arrangement  by  which  a  debt  arising 
from  fraud  is  made  a  matter  of  mere  partnership  account  precludes 
the  firm  from  ranking,  in  respect  of  that  debt,  as  a  separate  cred- 
itor against  the  separate  estate  of  the  individual  partner."* 

Same — Distinct  Trades. 

The  same  principle  which,  in  the  event  of  the  bankruptcy  of  a 
firm,  allows  proof  to  be  made  on  behalf  of  one  of  its  members  against 

87  3  Ante,  p.  282. 

874  Ex  parte   Smith,   1   Glyn   &  J.   74;     Ex   parte   Watkins,    Mont.    &    M.   57; 
Ex  parte  Lodge,  1  Ves.  Jr.  166. 
87  B  Read  V.  Bailey,  3  App.  Cas.  94,  afl5rming  Lacey  v.  Hill,  4  Ch.  Div.  537. 
87  8  Ex  parte  Yonge,  3  Ves.  &  B.  31,  2  Rose,  40. 

877  Ex  parte  Turner,  4  Deac.  &  C.  169;  Ex  parte  Crofts,  2  Deac.  102;  Hx 
parte  Hinds,  3  De  Gex   &  S.  613. 

878  Ex  parte  Turner,  4  Deac.  &  C.  169. 


§124)         RIGHTS    OF    FIUM    CREDITORS    IN    SErARATE  PROPERTY. 


291 


its  joint  estate,  in  respect  of  a  debt  contracted  by  the  firm  to  him 
as  a  distinct  trader,"^  also  allows  proof  to  be  made  on  behalf  of 
the  joint  estate  of  a  firm  against  the  sepai-ate  estate  of  one  of  its 
partners,  who  has  carried  on  a  trade  distinct  from  that  of  the  firm, 
and  has  become  indebted  to  it  in  the  ordinary  course  of  his  distinct 
trading.  If,  therefore,  a  person  who  is  a  partner  in  a  trading  firm 
carries  on  a  distinct  trade  of  his  own,  and  becomes  indebted  to  the 
firm  for  goods  sold  to  him  in  the  way  of  their  trades,  and  then  becomes 
bankrupt,  the  firm  is  treated  as  a  separate  creditor  for  the  debt  so 
contracted,  and  is  allowed  to  prove  accordingly.^*"  So,  in  the 
case  of  a  bankrupt  firm,  proof  for  debts  thus  contracted  by  an  in- 
dividual partner  is  allowed,  as  between  the  joint  estate  of  the  firm 
and  the  separate  estate  of  that  partner,  in  competition  with  his 
separate  creditors.^"  As  Lord  Eldon  put  it  in  Ex  parte  St. 
Barbe,^*^  "a  joint  trade  may  prove  against  a  separate  trade,  but  not 
a  partner  against  a  partner."  But,  although  there  may  have  been 
distinct  trades,  still,  if  the  debt  in  question  has  not  been  contracted 
in  the  ordinary  course  of  carrying  them  on,  such  proof  will  not  be 
allowed.®*^ 
Same — Firm  Creditor  Petitioning. 

The  court  of  chancery  in  England  permits  a  petitioning  creditor, 
though  a  joint  creditor,  to  charge  the  separate  effects  pari  passu 
with  the  separate  creditors,  because,  as  it  is  said,  his  petition,  being 
prior  in  time,  is  in  the  nature  of  an  execution  in  behalf  of  himself 
and  the  separate  creditors.'"  This  exception  applies  only  to  the 
petitioning  creditor.  The  other  firm  creditors  are  not  let  in  to 
share  in  the  separate  estate.'"  This  exception  does  not  appear 
to  have  been  recognized  by  the  courts  of  this  country. 


88« 


•  79  Ante,  1).  280. 

•  80  Ex  parte  Hesham.  1  Rose,  146;    Ex  parte  Castill,  2  Glyn  &  J.  124. 
381  Ex  parte  St.  Barbe,  11  Ves.  413. 

«82  11  Ves.  413. 

883  Ex  parte  Williams,  3  Mont,  D.  &  D.  433;  Ex  parte  Sillitoe,  1  Glyn  &  J. 
382;    Ex  parte  Hargreaves,  1  Cox,  Ch.  440. 

884  Ex  parte  Ackerman,  14  Ves.  604;  Ex  parte  Hall,  9  Ves.  349;  Ex  parte 
Detastel,  17  Ves.  247;  Ex  parte  Burnett,  2  Mont.,  D.  &  D.  357.  But  see  Mur- 
rill  V.  Neill,  8  How.  414;    Ex  parte  Abell,  4  Ves.  837. 

88B  Ex  parte  Elton,  3  Ves.  Jr.  238.      Cf.   Crispe   v,   Perritt.   1   Cooke.   Baukr. 
Laws  (8th  Ed.)  26,  1  Atk.  133. 
386  Murrill  v.  Neill,  8  How.  414. 


292  RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PKKtONS.  (Ch.  6 

Same  —  Government  a  Firm,  Creditor. 

Under  the  federal  bankrupt  acts  of  March  3,  1797,  and  March  2, 
1867,  now  repealed,  the  United  States  was  given  a  priority  in  the 
payment  of  its  claims  against  the  property  of  insolvents.  This 
priority  extended  to  the  separate  property  of  partners,  where  the 
hrm  was  indebted  to  the  United  States.^"  Where  the  debt  was 
due  from  one  partner,  the  United  States  had  no  priority  in  the  firm 
assets,  except  for  the  partner's  share  after  the  firm  debts  were 
paid.^** 
Same — Legal  Priorities  Previously  Acquired. 

This,  however,  is  a  rule  which  prevails  in  courts  of  equity  in  the 
distribution  of  equitable  assets  only.  Those  courts  have  never  as- 
sumed to  exercise  the  power  of  setting  aside  or  in  any  way  inter- 
fering with  an  absolute  right  of  priority  obtained  at  law.  In  regard 
to  all  such  cases,  the  rule  is,  "Equitas  sequitur  legem."  '*"  As  there 
is  no  doubt  that,  at  law,  the  judgment  for  a  partnership  debt  attach- 
es and  becomes  a  lion  u])on  the  real  estate  of  each  of  the  partners, 
with  the  same  effect  as  if  such  judgment  were  for  the  separate  debt 
of  such  partner,  the  principle  that  the  separate  property  of  an  in- 
dividual partner  is  to  be  first  applied  to  the  payment  of  his  separate 
debts  has  never  been  held  to  give  priority,  as  to  such  property,  to  a 
subsequent  judgment  for  an  individual  over  a  prior  judgment  for  a 
partnership  debt.^^°  It  is  true  that  courts  of  equity  will  sometimes 
give  to  a  mere  equitable  lien,  which  is  prior  in  point  of  time,  a  pref- 
erence over  a  subsequent  judgment;  but  this  will  be  done  only 
where  such  prior  lien  is  specific  in  its  character.'*"^  The  mere  gen- 
eral ecjuity  of  the  separate  creditors  to  have  their  debts  first  paid 
out  of  the  individual  property  of  the  partners  does  not  amount  to  a 

887  Lewis  V.  U.  S.,  92  U.  S.  618;  U.  S.  v.  Shelton,  1  Brock.  517,  Fed.  Cas. 
No.  16.272. 

888  u.  S.  V.  Hack,  8  Pet.  271;  U.  S.  ▼.  Duncan,  4  McLean,  607,  Fed.  Cas. 
No.  15.003.      And  see  Rex  v.  Sanderson,  Wigbtw.  50. 

889  1  Story,  Eq.  Jur.  §  553;  Meech  v.  Allen,  17  N.  Y.  300,  Ames,  Cas.  Partn. 
326;  In  re  Plummer,  1  Phil.  Ch.  56;  Preston  v.  Colby,  117  111.  477,  4  N.  E. 
375;  Allen  v.  Wells,  22  Pick.  (Mass.)  450;  Howell  v.  Teel,  29  N.  J.  Eq.  490; 
Gillaspy  v.  Peck,  46  Iowa,  461;    Cuniming's  Appeal,  25  Pa.  St.  268, 

3  80  In  re  Lewis,  2  Hughes,  320,  Fed.  Cas.  No.  8,313;  In  re  Sandusky,  17  N. 
B.  R.  452,  Fed.  Cas.  No.  12,308;  Adams  v.  Sturges,  55  111.  468;  Estate  of 
Frow,  73  Pa.  St.  459;   Wilder  v.  Keeler,  3  Paige  (N.  Y.)  167. 

«»i  White  T.  Carpenter,  2  Paige  (N.  Y.)  217. 


§    125)  RIGHTS    OF    PARTNERS    IN    SEPARATP:    PROPERTY.  293 

lien  at  all,  much  less  a  lien  of  the  kind  necessary  to  give  it  a  prefer- 
ence over  a  judgment  for  a  partnership  debt."*'  It  is  well  settled 
that,  in  a  snit  against  two  or  more  co-partners  upon  their  joint  debt, 
the  separate  property  of  any  one  of  the  partners  may  be  attached, 
and  the  lien  so  acquired  is  not  discharged  or  impaired  by  a  subse- 
quent attachment  of  the  same  property  upon  n  suit  in  favor  of  a 
separate  creditor  of  the  same  partner."'  The  supreme  court  of  New 
Hampshire  has  in  several  cases  held  otherwise.'"* 

Marslmllng. 

When  a  firm  creditor  thus  has  two  funds  to  which  he  can  resort, 
the  separate  creditors  can  call  into  operation  the  doctrine  of  marshal- 
ing; and,  if  such  partnership  creditor  can  get  satisfaction  of  any 
part  of  his  claim  out  of  the  partnership  assets,  the  pro  rata  distribu- 
tion to  which  such  partnership  creditor  is  entitled  out  of  the  part- 
nership fund  shall  be  first  applied  as  a  credit  on  his  claim  against 
the  separate  partner,  in  relief  of  the  fund  of  such  separate  partner, 
for  the  benefit  of  the  separate  creditors  of  the  latter. 


80B 


SAME— PARTNERS  IN  SEPARATE  PROPERTY. 

125.  Partners   are  postponed  to  separate   and  firm  credit- 
ors in  the  distribution  of  the  separate  property  of 
co-partners,  except 
EXCEPTIONS— (a)  Where  there  has  been   a  fraudtQent 
conversion  (p.  2  )4). 

(b)  Where  there  have  been  distinct  trades  (p.  294). 

(c)  Where  the  partnership  had  not  been  actually  form- 

ed (p.  294). 

(d)  Where  there  are  no  joint  debts  (p.  295). 

(e)  Where  the  separate  estate  is  insolvent  (p.  296). 

The  principle  that  a  debtor  shall  not  be  allowed  to  compete  with 
his  own  creditors  is  as  strictly  carried  out  in  administering  the  sep- 

•  9  2  Meech  t.  Allen,  17  N.  Y.  300. 

3  93  Allen  V.  Wells,  22  Pick.  (Mass.)  450;    Newman  v.  Bagley,  16  Pick.  (Mast.) 
570;    Stevens  v.  Perry,  118  Mass.  380. 
894  Jarvis  v.  Brooks,  23  N.  H.  136;    Bowker  t.  Smith,  48  N.  H.  111. 
»»»  In  re  Lewis,  2  Hughes,  320,  Fed.  Gas.  No.  8,313. 


294  KIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Ch.    G 

arate  estates  of  individual  partners  as  in  administering  the  joint 
estate  of  a  firm.  The  separate  estate  of  each  partner  is  liable  to 
the  debts  of  the  firm,  subject  only  to  the  prior  claims  of  his  sep- 
arate creditors.  Whence  it  is  obvious  that  one  partner  cannot  com- 
pete with  the  separate  creditors  of  his  co-piiruuT  without  diminish- 
ing the  fund  which,  subject  to  their  claims,  is  applicable  to  the  pay- 
ment of  the  joint  debts,  and  therefore  of  his  own  creditors.  In  other 
words,  the  rights  of  the  joint  creditors  preclude  one  partner  from 
ranking  as  a  separate  creditor  of  his  co-partner  until  the  joint  cred- 
itors are  paid  in  full.*^*  Moreover,  it  is  now  settled,  in  opposition 
to  some  older  cases,^®^  that  a  solvent  partner  is  not  entitled  to  rank 
as  a  creditor  against  the  estate  of  his  bankrupt  co-partner  upon  in 
demnifying  that  estate  against  the  claims  of  the  joint  creditors.  He 
must  show  that  those  claims  are  discharged  or  otherwise  barred.'^^ 
Although  a  partner  cannot  prove  against  his  co-partner  so  long  as 
the  joint  debts  are  unpaid,^""  yet,  if  a  debt  owing  by  the  bankrupt 
partner  to  his  co-partner  has  been  canceled,  and  in  consideration 
thereof  the  bankrupt  has  taken  upon  himself  a  debt  due  from  his 
co-partner  to  a  third  party,  this  debt,  so  substituted  for  the  first, 
may  be  proved  by  such  third  party,  in  competition  with  the  other 
separate  creditors  of  the  bankrupt,  whether  the  joint  creditors  are 
paid  or  not.**^°  The  disability  of  a  partner  to  prove  in  competition 
with  his  own  creditors  prevents  proof  by  a  firm  to  which  he  belongs 
against  his  own  separate  estate,  for  proof  by  such  a  firm  is  obviously 
nothing  more  than  proof  by  himself  and  co-partners.*"^ 
Exceptions— Fraud— Distinct  Trades— Lie hoate  Partim'shipa. 

The  principle  which  allows  joint  estate  to  prove  against  separate 
estate,  and  separate  estate  to  prove  against  joint  estate,  in  cases 
where  there  has  been  a  fraudulent  conversion  of  property,  or  where 

396  Amsinck  v.  Bean,  22  Wall.  395;  HUl  v.  Beach.  12  N.  J.  Eq.  31;  Ex  parte 
Bass,  3(3  Law  J.  Bankr.  39;  Ex  parte  CoUiage,  4  De  Gex,  J.  &  S.  533;  Nanson 
V.  Gordon,  1  App.  Gas.  195;    Ex  parte  Carter,  2  Glyn  &  J.  233;    Ex  parte  May, 

3  Deac.  382. 
897  Ex  parte  Taylor,  2  Rose,  175;    Ex  parte  Ogilvy,  Id.  177. 
8  98  Ex  parte  Moore,  2  Glyn  &  J.  166. 
89 9  Payne  v.  Matthews,  6  Paige  (N.  Y.)  19;    Price  v.  Gavins,  50  Ind.  122; 

Allemau  v.  Reagan's  Adiu'r.  28  Ind.  101);    Hill  v.  Beach,  12  N.  J.  Eq.  31. 

400  In  re  Todd,  De  Gex,  ST. 

401  Ex  parte  Turner,  4  Deac.  &  C.  169;   Ex  parte  Smith,  1  Glyn  »&  J.  74. 


§  125)       RIGHTS  OF  PARTNERS  IN  SEPARATE  PROPERTY.  295 

there  have  been  distinct  trades,  and  a  debt  contracted  in  the  course 
of  those  trades,  is  also  applicable  to  proofs  by  one  partner  against 
another,  in  similar  aises.*"'  Moreover,  if  A.,  intending  to  become  a 
partner  with  B.,  advances  him  money  as  his  (A.'s)  share  of  the  com- 
mon stock,  and,  before  the  pai'tnei-ship  is  entered  into,  B.  becomes 
bankrupt,  A.  may  prove  against  B.'s  separate  estate,  as  a  separate 
creditor,  for  the  amount  of  the  advance,  unless  A.,  without  being  a 
partner,  has  made  himself  liable  to  creditors  as  if  he  were  one.*°'' 

Same — iVb  Joint  Debts. 

Hitherto  the  right  of  one  partner  to  rank  as  a  separate  creditor  of 
his  co-partner  has  been  considered  solely  with  reference  to  joint 
creditors.  It  is  necessary,  however,  also,  to  notice  it  with  reference 
to  separate  creditors.  They  are  obviously  benefited  by  the  rule 
which  prevents  one  partner  from  proving  a.uniust  the  separate  estate 
of  his  co-partner,  but  it  is  not  for  their  sake  that  such  rule  has  been 
established;  and  where  the  reason  for  the  rule  ceases  to  exist,  the 
rule  itself  ceases  to  be  applicable.  Hence,  if  there  never  were  any 
joint  debts,  or  if  all  those  which  once  existed  have  ceased  to  exist,**** 
either  because  they  have  been  paid,  barred,  satisfied,  or  converted 
into  separate  debts,  then  one  partner,  who  is  a  creditor  of  another, 
may,  on  the  bankruptcy  of  the  latter,  prove  against  his  separate 
estate  in  competition  with  his  other  separate  creditors.*""^  Again, 
if  one  partner  has  paid  the  joint  debts,  he  is  entitled  to  prove  as  a 
separate  creditor  of  his  co-partner  for  the  amount  of  the  share 
which  ought  to  have  been  paid  by  him ;  and  it  is  immaterial  whether 
the  debts  have  been  paid  before  or  since  the  bankruptcy.*"" 

In  cases  of  this  sort,  moreover,  the  amount  provable  against  each 
bankrupt  is  ascertained,  not  by  dividing  the  whole  amount  of  the 
debts  paid  by  the  number  of  partners,  or  by  the  number  of  shares 
held  by  them  without  reference  to  their  ability  to  pay,  but  by  treat- 

402  Ex  parte  Westcall,  9  Ch.  App.  G26;    Ex  parte  Maude,  2  Ch.  App.  550. 

405  Ex  parte  Turquaud.  2  Mont..  D.  &  D.  339.    See,  also,  Ex  parte  Megarey,  De 

<3ex,  1G7. 

404  Ex  parte  Andrews.  25  Ch.  Div.  505. 

406  Ex  parte  Grazebrook.  2  Deoc.  &  C.  186;    Ex  parte  Young,  2  Rose,  40. 

406  Scott's  Appeal,  88  Pa.  St.  173;  Busby's  Adm'x  v.  Chenault,  13  B.  Mon.  (Ky.) 
554;  Amsinck  t.  Bc^au,  22  Wall.  395;  In  re  Dell,  5  Sawy.  344,  Fed.  Cas.  iNo.  3,774; 
Hill  ▼.  Beach,  12  N.  J.  Eq.  31. 


296 


RIGHTS    AND    LIABILITIES    AS    TO    THIRD    PERSONS.  (Cll.   6 


ing  each  partner  as  liable  to  contribute  his  own  share,  calculated 
as  above,  and  also  to  contribute,  as  surety  for  the  rest,  to  the  pay 
ment  of  what  is  due  from  them,  but  which  they  are  themselves  un- 
able to  pay.  Those,  in  fact,  who  can  pay,  must  make  up  for  those 
who  cannot.""  Again,  although,  where  one  partner  is  indebted 
to  the  firm,  and  the  lien  upon  his  share  is  insufficient  to  satisfy  such 
debt,  the  deficiency  cannot  be  proved  against  his  separate  estate  in 
competition  with  the  joint  creditors  of  the  firm,  or  until  they  are 
paid,*"®  yet  such  deficiency  is  provable  against  his  separate  estate 
in  competition  with  his  separate  creditors,  where  the  rights  of  the 
joint  creditors  do  not  intervene.*"" 

Same — Separate  Estate  Insolvent. 

Further,  if  the  separate  estate  of  a  partner  is  clearly  insufficient 
to  pay  his  separate  debts,  excluding  that  which  he  owes  to  his  co- 
partner, the  latter  is  entitled  to  prove;  for,  ex  hypothesi,  there  is  no 
possibility  of  any  surplus  out  of  which  the  joint  creditors  can  be 
paid  anything  whatever.  They,  therefore,  are  in  no  way  prejudiced 
by  the  proof.*" 

SAME— JOINT    AND    SEPARATE    CREDITORS    IN    FIRM    AND 
SEPARATE  PROPERTY. 

126.  Joint  and  separate  creditors  of  a  firm  and  of  some  or 
all  its  members  may  prove  against  both  the  firm 
and  separate  property.  The  English  rule  is,  with 
some  exceptions,  contra. 

With  a  view  to  avoid  as  much  as  possible  any  interruption  in  the 
statement  of  the  principles  according  to  which  the  conflicting  rights 
of  the  creditors  of  the  firm  and  the  separate  creditors  of  the  indi 
vidual  partners  are  adjusted,  the  consideration  of  the  position  of 
those  creditors  who  are  both  joint  and  separate  (i.  e.  of  those  who, 
in  respect  of  the  same  debt,  have  the  option  of  suing  either  all  the 
partners  jointly  or  some  or  one  of  them  separately  from  the  others) 

*0T  Wood  V.  Dodgson,  2  Maule  &  S.  195. 

<08  Ex  parte  Carter,  2  Glyn  &  J.  233;  Ex  parte  Reeve,  9  Ves.  588. 

*o»  Ex  parte  Watson,  Buck,  449;    Ex  parte  King,  17  Ves.  115. 

*io  Ex  parte  Topping,  4  De  Gex,  J.  &  S.  551;  Ex  parte  Sheen,  6  Ch.  DIv.  235. 


§    126)  RIGHTS    OF   JOINT    AND   SEPARATE   CREDITORS.  297 

has  been  hitherto  postponed.  In  order  that  a  creditor  may  rank 
as  a  joint  and  separate  creditor,  it  is  necessary  that  there  should 
be  two  distinct  rights  vested  in  him  at  the  same  time,  by  virtue  of 
which  he  is  enabled  to  pursue  either  of  the  two  remedies  above  al- 
luded to.  In  the  United  States  firm  and  separate  creditors  are  en- 
titled to  a  dividend  from  the  joint  estate  of  the  firm  and  the  separate 
estates  of  the  partners.*^^ 
English  Rule  Contra. 

In  England,  such  double  proof  is  excluded.  A  joint  and  separate 
creditor  is  compelled  to  elect  whether  he  will  proceed  against  the 
firm  property  or  the  separate  property.* ^^  The  English  bankruptcy 
act  of  1883  establishes  an  exception,  however,  in  cases  of  distinct 
trades  or  distinct  contracts,*^^  and  a  secured  creditor  is  allowed  to 
split  his  demand.  Thus,  he  may  prove  for  his  whole  debt  against 
the  estate  to  which  the  security  does  not  belong,  and  retain  and 
make  what  he  can  of  his  security;  or  he  may  give  up  his  security, 
prove  for  the  whole  debt  due  on  it  (i.  e.  the  whole  secured  debt) 
against  the  estate  to  which  the  security  belongs,  and  then  prove  for 
the  residue  of  his  debt  against  the  other  estate, — thus  in  fact  split- 
ting his  demand,  and  proving  for  part  against  the  joint  estate,  and 
for  the  residue  against  the  separate  estates  of  the  partners,  or  vico 
versa.*** 

*ii  In  re  Farnum,  6  Law  Rep.  21,  Fed.  Cas.  No.  4,674;  Mead  v.  Bank.  6  Blatchf. 
180,  Fed.  Cas.  No.  9,366;  In  re  Bigelow,  3  Ben.  146,  Fed.  Cas.  No.  1,397;  In  re 
Bradley,  2  Biss.  515,  Fed.  Cas.  No.  1,772;  Emery  v.  Bank,  3  Cliff.  507,  Fed.  Cas. 
No.  4,446;  In  re  Long,  7  Ben.  141,  Fed.  Cas.  No  8,476;  In  re  Thomas,  8  Biss.  139, 
Fed.  Cas.  No.  13,886;  Ex  parte  Nasou,  70  Me.  367;  Roger  Williams  Nat.  Bank  v. 
Hall,  160  Mass.  171,  35  N.  E.  666;  In  re  Vetterlein,  20  Fed.  110.  Where  an  as- 
•ignment  for  the  benefit  of  creditors  has  been  made  by  a  firm,  and  also  by  the  part- 
ners as  individuals,  the  holder  of  a  note  executed  by  the  firm  and  tue  members  in- 
dividually is  entitled  to  have  the  estates  of  the  partnership  and  of  each  partner 
kept  separate,  and  to  receive  a  dividend  from  each,  though  the  note  was  given  for 
a  firm  liability.     In  re  Carter  (Iowa)  67  N.  W.  239. 

*i2  Ex  parte  Bevan,  10  Ves.  107. 

418  2  Lindl.  Partn.  747. 

*i*  2  Lindl.  Partn.  750. 


298  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

CHAPTER  Vn. 

ACTIONS  BETWEEN  PARTNERS. 

127.  Action  on  Partnership  Claim  or  Liability — At  Law. 

128.  In  Equity. 

129.  Under  the  Code. 

130.  Actions  between  Firms  with  Common  Member. 

131.  Action  at  Law  on  Individual  Obligation. 

132.  Claim.s  not  Connected  with   Partnership. 

133.  Claims  for  Agreed  Final  Balances. 

134.  Express  Contracts  between  Partners. 

135.  Losses  Caused  by  Partner's  Wrong. 

136.  Equitable  Actions  in  General — Jurisdiction. 

137.  Necessity  of  Praying  for  a  Dissolution. 

138.  Noninterference  in  Matters  of  Internal  Regulation. 

139.  Effect  of  Laches. 

140.  Accounting  and  Dissolution. 

141.  Right  to  Accounting. 

142.  Accounting  upon  Dissolution. 

143.  Accounting  without  Dissolution. 

144.  Specific  Performance. 

145.  Injunction-  ' 

146.  Receivers. 

ACTION  ON  PARTNERSHIP  CLAIM  OR  LIABILITY— AT  LAW 

127.  A  partner  cannot  maintain  an  action   at  la"W  against 
his  co-partner  upon  either 

(a)  An  obligation  to  the  firm  from  the  defendant,  or 

(b)  An  obligation  from  the  firm  to  the  plaintiff. 

In  the  absence  of  statute,  there  is  no  method  by  which  an  ordi- 
nary firm  can  sue  or  be  sued  as  such ;  for  the  firm,  as  distinguished 
from  the  persons  composing  it,  has  no  judicial  existence.  All  pro- 
ceedings, therefore,  which  have  for  their  object  the  enforcement 
of  partnership  rights  or  partnership  obligations,  must  be  taken  by 
or  against  the  partners  individually.  It  follows  from  this  nonrecog- 
aition  of  the  firm  as  an  entity  distinct  from  its  members  that  no 
action  at  law  can  be  maintained  by  a  partner  against  his  co-partners 


§    1-7)  ACTIONS AT    LAW.  299 

upon  a  claim  against  the  firm,  and  vice  versa,  that  no  action  at  law 
can  be  maintained  against  a  partner  by  his  co-partners  upon  a  claim 
due  the  firm.^ 

The  real  reason  why  a  partner  cannot  sue  a  co-partner  upon  a 
partnership  claim  or  a  partnership  liability  is  that  until  there  has 
been  an  accounting,  and  all  the  partnership  affairs  are  settled,  there 
is  no  cause  of  action  in  favor  of  any  partner  against  any  of  his  co- 
partners.*     In  Ives  V.  Miller,'  Hand,  P.  J.,  said:   "Until  the  affairs 

1  Ames,  Cas.  Partn.  p.  449  et  seq.  "When  a  partnership  is  subsisting,  and 
there  is  no  liquidation  of  the  accounts,  though  there  is  actually  a  bahince  of  over 
£100  due  to  one  partner,  he  [the  creditor]  cannot,  upon  such  a  debt,  support  a 
commission;  but,  had  the  partnership  been  determined,  and  had  the  solvent  partner 
paid  all  debts,  1  should  think  he  might  sustain  the  commission."  Lord  Eldon,  in 
Ex  parte  Nokes,  2  Mont.  Bankr.  p.  148,  1  Mont.  &  A.  47,  note  a.  Persons 
participating  in  and  financial  subscribers  to  an  effort  to  push  a  bill  through 
parliament  looking  to  the  establishment  of  a  railway  enterprise  are  in  so  far 
partners  that  one  of  them  who  actually  did  the  surveying  has  not  an  action 
against  one  or  all  of  them  to  receive  his  compensation.  Holmes  v.  Higgins,  1 
Barn.  &  C.  74.  One  partner,  who,  being  taken  in  execution  of  a  judgment 
against  his  firm,  pays  the  judgment  with  his  private  funds  in  order  to  regain  his 
liberty,  cannot,  on  the  ground  of  compulsion,  recover  from  his  co-partner  in  exe- 
cution. Sadler  v.  Nixon,  5  Bam.  &  Adol.  936  (Lord  Denman).  in  an  action  on 
a  contract  between  the  parties  whereby  they  had  agreed  to  carry  on  business 
in  a  certain  specified  way,  in  which  action  the  declaration  set  forth  the  agreement 
and  alleged  the  defendant  excluded  the  plaintiff  from  the  management  and  profits 
of  the  business,  and  refused  to  make  annual  settlement  and  payments,  and, 
although  continuing  the  business  on  the  premises  and  with  the  tools  of  the 
plaintiff,  and  making  large  profits,  refused  to  recognize  that  plaintiff  had  any 
rights  under  the  agreement,  held,  on  demurrer,  that  the  parties  were  partners, 
and  the  action  therefore  not  maintainable.      Ryder  v.  Wilcox,  103  Mass.  24. 

2  See  Miner  v.  Lorman,  56  Mich.  212,  22  N.  W.  265;  Crosby  v.  Timolat,  50 
Minn.  171,  52  N.  W.  526;  Niven  v.  Spickerman,  12  Johns.  (N.  Y.)  401;  Halsted 
V.  Schmelzel,  17  Johns.  (N.  Y.)  80;  Casey  v.  Brush,  2  Caines  (N.  Y.)  293;  Cf. 
Johnson  v.  Kelly,  4  Thomp.  &  C.  (N.  Y.)  417;  I'attison  v.  Blanchard,  6  Barb. 
(N.  Y.)  537;  Ferguson  v.  Wright,  61  Pa.  St.  25S;  Perley  v.  Brown,  12  N.  H.  493; 
Young  V.  Brick,  3  N.  J.  Law,  241;  Harris  v.  Harris,  39  N.  H.  45;  Scott  v. 
Oaruth,  50  Mo.  120;  Chadsey  v.  Harrison,  11  111.  151;  Burns  v.  Nottingham,  60 
111.  531;  White  v.  Ross,  35  Fla.  377,  17  South.  640;  Lord  v.  Peaks,  41  Neb.  737, 
60  N.  W.  353;  Remington  v.  Allen.  109  Mass.  47;  Newby  v.  Harrell,  99  N.  C. 
149,  5  S.  E.  284;    O'Brien  v.  Smith,  42  Kan,  49,  21  Pac.  784.     See  also,  cases 

»  19  Barb.  (N.  Y.)  196,  200. 


300  ACTIONS    BETWEEN    PARTNERS.  (Ch.    7 

of  the  concern  are  wound  up,  what  one  partner  may  owe  the  firm 
is  not  a  debt  due  to  a  co-partner;  nor  is  the  indebtedness  of  the 
firm  to  one  of  the  members  a  debt  due  from  the  other  members  to 

hereafter  cited  in  thia  chapter.  As  to  the  right  of  an  indorsee  of  a  firm  note 
to  a  partner  to  sue,  see  Carpenter  v.  Greenop,  74  Mich.  G(j4,  42  N.  VV.  276; 
Walker  v.  Wait,  50  Vt.  068.  Cf.  Davis  v.  Merrill,  51  Mich.  480,  16  N.  W.  804; 
Wintermute  v.  Torrent,  83  Mich.  5.55,  47  N.  W.  358.  While  a  partnership  exists 
or  remains  unsettled,  no  action  at  law  can  be  maintained  by  one  partner  against 
another,  except  an  action  of  account  or  assumpsit  on  a  promise  to  account.  Chase 
V.  Garvin,  19  Me.  211;  Burley  v.  Harris,  8  N.  H.  233.  See  Estes  v.  WhippK'. 
12  Vt.  373;  Graham  v.  Holt,  3  Ired.  (N.  C.)  300;  Stothert  t.  Knox,  5  Mo.  112; 
Davenport  v.  Gear,  3  111.  495.  The  relation  of  debtor  and  creditor  between  the 
surviving  partner  and  the  representative  of  the  deceased  partner  does  not  arise 
until  the  affairs  of  the  partnership  are  wound  up  and  a  balance  is  struck.  Such 
balance  is  to  be  struck  after  all  partnership  affairs  are  settled.  Gleason  v. 
White,  34  Cal.  258;  White's  Adra'r  v.  Waide,  Walk.  (Miss.)  203.  One  partner 
cannot  sue  another,  for  his  share,  while  their  partnership  accounts  are  unsettled. 
Dewit  V.  Staniford,  1  Root  (Conn.)  270;  Lamalere  v.  Caze,  1  Wash.  C.  C.  435, 
Fed.  Cas.  No.  8,(X)3;  Kennedy  v.  M'Fadon,  3  Uar.  &  J.  (Md.)  194;  Ozeas  v. 
Johnson,  1  Bin.  (Pa.)  191;  Young,  v.  Brick,  3  N.  J.  Law,  241;  Murray  v.  Bogert, 
14  Johns.  (N.  Y.)  318;  Springer  v.  Cabell,  10  Mo.  640;  McKuight  v.  Mc- 
Cutchen,  27  Mo.  430;  Robinson  v.  Green's  Adm'r,  5  Har.  (Dol.)  115;  Smith  v. 
Smith,  33  Mo.  557;  Ives  v.  Miller,  19  Barb.  (N.  Y.)  196;  Lower  v.  Denton, 
9  Wis.  208.  Where  a  debt  against  a  firm  has  been  collected  of  one  of  the  part- 
ners, he  cannot  sue  the  other  partner  at  law  for  contribution,  though  the  debt 
was  paid  out  of  his  separate  property.  Lawrence  v.  Clark,  9  Dana  (Ky.)  257. 
Partners  cannot  sue  each  other  at  law  for  any  matter  relating  to  the  partnership 
concerns  unless  there  has  been  a  final  settlement  between  them,  the  balance 
ascertained,  and  an  express  promise  to  pay  the  balance.  Without  a  general 
adjustment  of  the  partnership  concerns,  embracing  all  the  partnership  transactions, 
and  concurred  in  by  all  the  partners,  there  is  no  consideration  to  uphold  an 
express  promise  of  one  partner  to  pay  his  co-partner  a  balance  alleged  to  be 
due.  Chadsey  v.  Harrison,  11  111.  151.  See  also,  Phillips  v.  Blatchford,  137 
Mass.  510;  Fisher  v.  Sweet,  67  Cal.  228,  7  Pac.  657;  Bowzer  v.  Stoughton,  119  111. 
47,  9  N.  E.  208;  Bullard  v.  Kinney.  10  Cal.  60;  Learned  v.  Ayres,  41  Mich.  677,  3 
N.  W.  178.  One  of  two  partners  cannot,  at  law,  sue  the  other  on  his  failure  tc 
perform  a  covenant  to  which  they  were  both  bound  in  liquidated  damages  by 
the  articles  of  partnership.  He  must  first  apply  to  equity  for  a  dissolution  of 
the  partnership.  Stone  v.  Fouse,  3  Cal.  292.  Where  a  trustee,  under  a  deed 
of  trust  executed  by  one  partner  on  partnership  property  as  security  for  an 
individual  debt,  has  recovered  the  property  in  replevin  against  the  partner  exe- 
cuting the  deed,  who  was  in  possession  of  the  property,  the  other  partner  must 
resort  to  equity  in  order  to  recover  it  froio  the  trustee,  aa  one  part  owner  cannot 


§    127)  ACTIONS AT    LAW.  301 

him.  The  rights  of  the  parties  were  very  clearly  stated  by  Lord 
Cottenbam,  so  late  as  in  1S3S,  in  Richardson  v.  Bank  of  England."' 
That  was  a  motion  to  compel  a  partner  to  pay  into  court  a  large 
sum,  which  it  was  insisted  he  had  admitted  he  had  drawn  out,  with 
the  consent  of  the  partners,  before  dissolution.  The  lord  chancel- 
lor remarked  upon  the  ordinary  use  of  the  words  'creditor'  and 
'debtor,'  as  applied  to  partners  who  advance  to  or  draw  money  from 
the  firm  by  consent,  and  added:  'But  though  these  terms  "creditor" 
and  "debtor"  are  so  used,  and  sufficiently  explain  what  is  meant 
by  the  use  of  them,  nothing  can  be  more  inconsistent  with  the  law 
of  partnership  than  to  consider  the  situation  of  either  party  as  in 
any  degree  resembling  the  situation  of  those  whose  appellation  has 
been  so  borrowed.  The  supposed  creditor  has  no  means  of  com- 
pelling payment  of  his  debt;  and  the  supposed  debtor  is  liable  to  no 
proceedings,  either  at  law  or  in  equity;  assuming  always  that  no 
separate  security  has  been  taken  or  given.  The  supposed  credit- 
or's debt  is  due  from  the  firm  of  which  he  is  a  partner,  and  the 
supposed  debtor  owes  the  money  to  himself,  in  common  with  his 
partners;  and,  pending  the  partnership,  equity  will  not  interfere  to 
set  right  the  balance  between  the  partners.'  And  again:  'But  if, 
pending  the  partnership,  neither  law  nor  equity  will  treat  such  ad- 
vances as  debts,  \\ill  it  be  so  after  the  partnership  has  determined, 
before  any  settlement  of  accounts,  and  before  the  payment  of  the 
joint  debt,  or  the  realization  of  the  partnership  estate?  Nothing 
is  more  settled  than  that,  under  such  circumstances,  what  may  have 
been  advanced  by  one  partner,  or  received  by  another,  can  only 
constitute  items  in  the  account.  There  may  be  losses,  the  particu- 
lar partner's  share  of  which  may  be  more  than  sufficient  to  exhaust 
what  he  has  advanced,  or  profits  more  than  equal  to  what  the  other 
has  received;  and  until  the  amount  of  such  profit  and  loss  be  ascer- 
tained, by  the  winding  up  of  the  partnership  affairs,  neither  party 

maintain  an  action  at  law  against  hie  co-owner  for  the  joint  property.  HofP  v. 
Rogers,  07  Miss.  208,  7  South.  358.  A  partner  cannot  maintain  an  action  for 
parUtion  against  his  co-partner  as  to  real  estate  owned  by  the  firm,  where  there 
has  been  no  adjustment  of  the  co-partnership  accounts.  MacFarlane  v.  Mac- 
Farlane,  82  Hun,  238.  31  N.  Y.  Supp.  272.  See,  also,  post,  p.  304,  "Actions  in 
Equity." 
4  4  Mylne  &  C.  165. 


^9^  ACTIONS    BETWKE.V    PARTNERS.  (Ch.   7 

bas  anj  remedy  against  or  liability  to  the  other  for  payment,  from 
one  to  the  other,  of  what  may  have  been  advanced  or  leeeived.'  " 

There  is  another  reason  which  is  sufficient  in  many  cases  to  ex- 
plain the  rule  that  a  partner  cannot  maintain  an  action  at  law 
against  his  co-partner  on  a  partnership  claim  or  liability.  This 
reason  is  that,  wherever  the  partnership  claim  or  liability  on  which 
the  action  is  sought  to  be  maintained  is  a  joint  one,''  all  the  part- 
ners must  be  joined  as  plaintiffs  or  defendants,  as  the  case  may  be.« 
Omission  to  join  any  partner  may  be  pleaded  in  abatement  of  the 
action.  It  follows,  therefore,  that  a  partner  suing  on  such  a  part- 
nership claim  or  liability  would  have  to  be  joined  both  as  plaintiff 
and  as  a  defendant.  Now,  at  common  law  a  party  cannot  at  once 
be  a  plaintiff  and  a  defendant  in  the  sanu-  suit;  or,  in  other  words, 
he  cannot  sue  himself  either  alone  or  in  conjunction  with  others.^ 

Illust7'aiions — Action  on  Obligations  to  Firm. 

Under  the  first  branch  of  the  rule,  a  partner  cannot  maintain  an 
action  against  his  co-partner  where  the  liability  of  the  latter  is  in 
reality  an  obligation  to  tho  lirni.  Thus,  one  partner  cannot  main- 
tain an  action  to  recover  the  price  of  goods  sold  to  another  partner 
by  tht'  linn.  Tliis  was  held  in  an  action  of  assumpsit  by  one  of  three 
partners  in  a  steamboat  against  another,  to  recover  one-third  of 
the  amount  which  +he  latter  owed  the  firm  for  liquors  bought  by 
him  at  the  bar  of  the  boat.  The  partnership  business  had  ceased, 
but  its  affairs  had  not  been  settled.*      So,  also,  one  partner  is  not 

B  S('e  ante,  p.  245. 

"See  post,  p.  3fJ2. 

T  Story,  Partn.  221;  Bates,  Partn.  §  849;  T.  Para.  Partn.  §§  184,  185.  "One 
member  of  a  partnership  cannot  sue  the  firm  at  law  for  advances  made  by  him 
to  the  joint  concern,  nor  can  the  firm  sue  an  individual  partner  for  anything  that 
be  may  have  drawn  out  of  the  joint  stock  or  proceeds,  no  matter  how  much  more 
than  his  share  it  might  have  been;  and  the  reason  is  that  one  man  cannot 
occupy  the  double  position  of  plaintiff  and  defendant  at  the  same  time.  The 
aid  of  this  court  is  just  as  necessary  to  settle  the  account  of  these  advances  as 
it  is  to  settle  the  accounts  arising  out  of  the  immediate  transactions  of  the  special 
business  of  the  partnership."      Bracken  v.  Kennedy,  3  Scam.  (111.)  558,  5G4. 

8  Page  V.  Thompson,  33  Ind.  137.  See,  also,  Ivy  v.  Walker,  58  Miss.  253; 
Bank  of  British  North  America  v.  Delafield,  120  N.  Y.  410,  27  N.  E.  797;  Burley 
v.  Harris,  8  N.  H.  233.     But  see  Bennett  v.  Smith,  40  Mich.    211. 


§    127)  ACTIONS— AT    LAW.  303 

liable  to  his  co-partner  for  money  had  and  received  to  the  use  of  the 
firm,®  nor  for  money  lent  by  the  firm.^" 

Same — Actions  on  Obligations  to  Partners. 

Under  the  second  branch  of  the  rule  stated  in  the  black-ietter 
text,  a  partner  whose  claim  is  really  against  the  firm  cannot  recover 
any  part  thereof  in  an  action  against  one  or  more  of  his  co-part- 
ners. This  has  been  held  many  times  in  actions  for  work  and  labor 
performed  by  one  partner  for  the  firm,"  for  money  loaned  the  flrm,^^ 
for  goods  sold  to  the  firm,^'  for  money  paid  for  the  firm,^*  for 
rent  of  premises  occupied  by  the  firm,^*  and  other  similar  ca^es. 

»  Kutz  V.  Dreibelbis,  126  Pa.  St.  835,  17  Atl.  609;  Gardiner  ▼.  Fargo,  58 
Mich.  72,  24  N.  W.  655;  Howard  t.  Patrick,  3S  Mich.  795;  Smith  v.  Smith,  33 
Mo.  557;  Towle  v.  Meserve,  38  N.  H.  9;  Young  v.  Brick,  3  N.  J.  Law,  241; 
Dana  v.  Gill,  5  J.  J.  Marsh.  (Ky.)  242;  Bumey  v.  Boone,  32  Ala.  486;  Bovill  v. 
Hammond,  6  Bam.  &  C.  149;  Fromont  v.  Coupland,  2  Bing.  170;  Russell  v. 
Byron,  2  Cal.  86. 

10  Gammon  v.  Huse,  9  111.  App.  557;  Pitcher  v.  Barrows,  17  Pick.  (Mass.)  361; 
Fulton  V.  Williams,  11  Gush.  (Mass.)  108;  Temple  v.  Seaver,  11  Gush.  (Mass.) 
314;  Thayer  v.  Buffum,  11  Mete.  (Mass.)  398;  Smith  v.  Lusher,  5  Cowen  (N.  Y.) 
()88;    Crow  v.  Green,  111  Pa.  St.  637,  5  Atl.  23;    M'Fadden  v.  Hunt.  5  AVatta 

6  S.    (Pa.)   •«>8;    Davis  v.   Merrill,   51    Mich.   480,  16   N.    W.   804;     Hill   v.    Mc- 
Pherson,   15   Mo.   204;    Nevins  v.   Townsend,   6  Conn.  5;    Simrall   v.  O'Banuons, 

7  B.  Mon.  (Ky.)  608;   Smyth  v.  Strader,  4  How.  404. 

11  Holmes  v.  Higgins,  1  Bam.  &  C.  74;  Milburn  v.  Codd,  7  Bam.  &  C.  419; 
Lucas  V.  Beach,  1  Man.  &  G.  417,  425;  Robiuson  v.  Green's  Adm'r,  5  Har.  (Del.) 
115;  Duff  V.  Maguire,  99  Mass.  300;  Younglove  v.  Liebhardt,  13  Neb.  557,  14 
N.  W.  526;   Stone  v.  Mattingly  (Ky.)  19  S.  W.  402;    Hills  v.  BaUey,  27  Vt.  548. 

12  Colley  V.  Smith,  2  Moody  «&  R.  96;  Perring  v.  Hone,  4  Bing.  28;  Richardson 
V.  Bank  of  England,  4  Mylne  &  C.  165;  Gridley  v.  Dole,  4  N.  Y.  486;  Payne 
V.  Freer,  91  N.  Y.  43;  Bracken  v.  Kennedy,  3  Scam.  (111.)  558;  Sieghortner  t. 
Weissenborn,  20  N.  J.  Eq.  172;  O'Neill  v.  Brown,  61  Tex.  34;  Wilson  v.  Soper, 
13  B.  Mon.  (Ky.)  411;    Mickle  v.  Peet,  43  Conn.  65. 

13  Course  v.  Prince,  1  Mill,  Const.  (S.  C.)  416;  Remington  v.  Allen,  100  Mass. 
47;   Bullard  v.  Kinney,  10  Cal.  60. 

1*  Goddard  v.  Hodges,  1  Cromp.  &  M.  33;  Brown  v.  Tapscott,  6  Mees.  &  W.  119; 
Sadler  v.  Nixon,  5  Bam.  &  Adol.  936;  Leidy  v.  Messinger,  71  Pa.  St.  177;  Fess- 
ier  V.  Hickernell,  82  Pa.  St.  150;  Harris  v.  Harris,  39  N.  H.  45;  Torrey  v. 
Twombly,  57  How.  Prac.  (N.  Y.)  149;  Ives  v.  Miller,  19  Barb.  (N.  Y.)  196;  PhU- 
lips  V.  Blatchford,  137  Mass.  510;  Lyons  v.  Murray,  95  Mo.  23,  8  S.  W,  170; 
Glynn  v.  Phetteplace,  26  Mich.  383;  Murray  v.  Bogert,  14  Johns.  (N.  Y.)  318; 
Booth  V.  Bank,  74  N.  Y.  228;   Drew  v.  Ferson,  22  Wis.  651. 

18  Johnson  ▼.  Wilson,  54  111.  419;   Pio  I'ico  t.  Cuyas,  47  Cal.  174;   Estes  v.  Whip- 


304  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

Sajn&—Set-  Of. 

Of  course,  a  claim  which  cannot  be  directly  enforced  by  one  part- 
ner against  his  co-partners,  because  falling  under  one  or  the  other 
branches  of  the  rule  here  under  consideration,  cannot  be  indirectly 
enforced  as  a  set-off.^* 

SAME— IN  EQUITY. 

128.  An  obligation  between  a  firm  and  one  of  its  members 
can  be  enforced  only  by  proceeding  in  equity  for 
an  accounting,  except 

EXCEPTION — Actions  at  law  have  been  sustained  in  a 
few  states  in  the  following  cases: 

(a)  Where  the  partnership  has   terminated,  and  the  ac- 

tion is  for  a  final,  though  unascertained,  balance 
(p.  305). 

(b)  Where    the    partnership    w^as    for   a    single    finished 

transaction  (p.  307). 
(0)  Where   the    partnership  affairs    have  been   adjusted, 
except  as  to  a  single  transaction  (p.  308). 

Since  no  cause  of  action  exists  between  partners  previous  to  an 
accounting  upon  a  partnership  claim  or  liability,  if  the  partners  do 
not  voluntarily  settle  their  accounts,  the  only  method  of  enforcing 
an  obligation  between  a  firm  and  one  of  its  members  is  an  action 
for  an  accounting  and  settlement  of  the  partnership  alfairs.^^  "Now, 
the  settlement  of  all  the  partnership  concerns  is  ordinarily,  dur- 
ing the  continuance  of  the  partnership,  unattainable  at  law;    and 

pie,  12  Vt.  373,  Cf.  Allen  v.  Anderson,  13  111.  App.  451;  Kinney  v.  Kobison,  52 
Mich.  3S9.  18  N.  W.  120. 

i«  Johnson  v.  Wilson,  54  111.  419;  Hess  v.  Final,  32  Mich.  515;  Gardiner  t. 
Fargo,  58  Mich.  72,  24  N.  W.  655;  Elder's  Appeal,  39  Mich.  474;  Hewitt  v.  Kuhl, 
25  N.  J.  Eq.  24;  Cumniings  v.  Morris,  25  N.  Y.  625;  Ives  v.  Miller,  19  Barb.  (N. 
Y.)  196;  Dodd  v.  Tarr,  116  Mass.  287;  Neil  v.  Greenleaf,  26  Ohio  St.  567;  Lin- 
derman  v.  Disbrow,  31  Wis.  465;  Tomlinson  v.  Nelson,  49  W^is.  679,  6  N.  W.  366; 
Wharton  v.  Douglass,  76  Pa.  St.  273;  Love  v,  Rhyne,  86  N.  C.  576;  Wood  v. 
Brush,  72  Cal.  224,  13  Pac.  627;  Young  v.  Hoglan,  52  Cal.  466. 

IT  Unless  a  settlement  has  been  made,  and  a  balance  struck,  between  partners, 
the  remedy,  where  there  are  two,  is  an  action  of  account;  where  more  than  two,  a 
bill  in  equity.    Beach  y.  Hotchkiss,  2  Conn.  425. 


§    128)  ACTIONS IN    EQUITY.  305 

even  in  equity  it  is  not  ordinarily  enforced,  except  upon  a  dissolu- 
tion of  the  partnership.  If  one  partner  could  recover  against  his 
copartners  the  whole  amount  paid  by  him  on  account  of  the  part- 
nership, they  would  immediately  have  a  cross  action  against  him 
for  the  whole  amount  or  his  share  thereof;  and,  if  he  could  recover 
only  their  shares  thereof,  then,  in  order  to  ascertain  those  shares, 
the  full  account  of  all  the  partnership  concerns  must  be  taken,  and 
the  partnership  itself  wound  up."  ^®  "It  is  a  general  rule,"  said 
Abbott,  C.  J.,  in  Bovill  v.  Hammond,^"  "that  between  partners, 
whether  they  are  so  in  general  or  for  a  particular  transaction  only, 
no  account  can  be  taken  at  law."  ^^  And  in  another  case  it  was 
said:  "The  remedy  in  sueli  cases  is  in  equity,  where  the  power  to 
investigate  accounts  to  compel  specific  performan ''s  and  to  restrain 
breaches  of  duty  for  the  future,  affords  the  only  relief  which  can 
be  had."  "  The  principles  governing  a  partnership  accounting  in 
equity  will  be  presently  separately  discussed." 
Exceptions — Massachusetts  Rule. 

It  has  been  held  in  a  few  states  that  a  balance  due  on  a  part- 
nership account  may  be  recovered  in  an  action  at  law,  provided  the 
partnership  has  terminated,  and  the  judgment  will  finally  settle  all 
questions  between  the  parties  growing  out  of  the  partnership  af- 
fairs.**    This  doctrine  was  firmly  established  in  Massachusetts  at 

18  Story,  Partn.  §  221.  i»  6  Barn.  &  C.  149,  151. 

2  0  No  action  at  law  will  lie  for  the  settlement  of  a  paitnerahip  account  where  the 
number  of  the  partners  exceeds  two,  the  only  remedy  in  such  case  being  by  bill  in 
chancery.  Beach  v.  Hotchkiss,  2  Conn.  425.  When  a  firm  consists  of  only  two 
members,  assumpsit  lies  by  one  against  the  other  to  settle  and  adjust  partnership 
affairs.  Conn.  Revision  1875,  tit.  19,  c.  7,  §  5.  The  rights  of  partners  inter 
se  can  be  settled  and  determined  at  law  as  well  as  in  equity.  Wallace  v.  Uull,  28 
Ga.  G8. 

21  Ryder  v.  Wilcox,  103  Mass.  24,  31.  Equity  ha.s  plenary  jurisdiction  over 
partnership  accountings.    Bracken  v.  Kennedy,  3  Scam.  (HI.)  5.j8. 

2  2  See  post,  p.  332. 

23  Fry  v.  Potter,  12  R.  I.  541i;  Pettiugill  v.  Jones,  28  Kan.  749;  Wheeler  v. 
Arnold,  30  Mich.  304;  Pool  v.  Perdue,  44  Ga.  454.  A  partner  cannot  obtain  judg- 
ment against  his  co-partners  for  a  debt  due  him  by  the  partnership,  when  it  is 
<hown  that  the  partnership  accounts  are  unsettled,  and  that  the  judgment  asked  for 
ivill  not  have  the  efifect  of  a  final  liquidation  of  the  partnership  affairs.  Austin  ▼. 
Vaughau,  14  La.  Ann.  43. 

GBO.PART.— 20 


306  ACTIONS     BETWEEN    PARTNERS.  (,Cll.    ( 

a  time  when  there  were  no  courts  of  equity  in  that  state.**  It  is 
well  stated  by  Bigelow,  J.,  as  follows:  "By  the  well-sett lod  rule 
of  law  in  this  commonwealth,  an  action  may  be  well  maintained  by 
one  co-partner  against  another  to  recover  a  final  balance  remain- 
ing due  upon  the  close  of  business  of  a  firm  after  its  dissolution. 
Nor  is  it  necessary  that  this  should  be  a  fixed  ascertained  balance 
as  the  result  of  a  settlement  of  the  accounts  of  the  firm  between  the 
partners.  It  is  enough  if  it  appear  that  the  firm  is  dissolved,  and 
that  there  are  no  outstanding  debts  due  to  or  from  the  co-partner- 
ship, so  that  the  action  of  assumpsit  to  recover  the  balance  due  one 
of  the  firm  will  effect  a  final  settlement  between  the  co-partners."  " 
In  a  much  later  case,  Ames,  J.,  said:  "In  the  case  of  co-partners, 
neither  a  settlement  of  the  accounts,  nor  an  express  promise  to 
pay,  need  be  proved,  where  the  suit  is  assumpsit  for  a  final  bal- 
ance." "  It  has  been  held  that  the  remedy  in  equity  given  by  stat- 
ute does  not  affect  the  application  of  the  rule  to  cases  where  the 
remedy  by  action  at  law  is  plain  and  adequate."  Where  there  are 
debts  due  the  partnership  outstanding,  the  action  is  not  for  a  final 
balance,  and  cannot  be  maintained.*^  But  the  plaintiff  may  show 
that  the  outstanding  debts  of  the  partnership  are  incapable  of  col- 
lection, and  thus  that  the  judgment  rendered  will  be  a  final  set- 
tlement between  the  partners;    and  in  such  case,  especially  if  an 

24  See  Bond  v.  Hays,  12  Mass.  34;  Fanning  v.  Chadwick,  3  Pick.  420;  Brinley 
V.  Knpfcr,  6  Pick.  179;  Williams  v.  Heushaw,  11  Pick.  79;  Rockwell  v.  Wilder 
4  Mete.  55(5;  Shepard  v.  Richards,  2  Gray,  424;  Sikes  v.  Work,  6  Gray,  433;  Shat- 
tuck  V.  Lawsou,  10  Gray,  405;  Wheeler  v.  Wheeler,  111  Mass.  247,  250;  Wilkins 
V.  Davis,  15  N.  B.  R.  60,  Fed.  Gas.  No.  17,664. 

2  5  Sikes  V.  Work,  6  Gray  (Mass.)  433,  434. 

26  Wheeler  v.  Wheeler,  111  Mass.  247,  250.  "It  has  been  held  too  often  now  to 
be  questioned  that  assumpsit  will  lie  to  recover  a  final  balance  of  a  partnership  ac- 
count, and  that  this  extends  to  all  cases  in  which  the  rendition  of  the  judgment  will 
be  an  entire  termination  of  the  partnership  transactions,  so  that  no  further  cause 
of  action  can  grow  out  of  them.  Brigham  v.  Eveleth,  9  Mass.  538;  Jones  v.  Uar- 
raden.  Id.  540;  Bond  v.  Hays,  12  Mass.  34;  Wilby  v.  Phiuney,  15  Mass.  116;  Fan- 
ning V.  Chadwick,  3  Pick.  (Mass.)  420;  Brinley  v.  Kupfer,  6  Pick.  (Mass.)  179. 
This  rule  is  not  only  founded  on  authority,  but  is  reasonable  in  principle,  and  con- 
venient in  practice."    Williams  v.  Henshaw,  11  Pick.  (Mass.)  79,  81. 

27  Fanning  v.  Ghadwick,  3  Pick.  (Mass.)  420;  Shepard  v.  Richards,  2  Gray 
(Mass.)  424. 

2  8  Williams  v.  Henshaw,  11  Pick.  (Mass.)  79,  82. 


§    128)  ACTIONS IN    EQUITY.  '"j07 

assignment  of  all  the  outstanding  debts  is  seasonably  given  or  ten- 
dered to  the  other  party,  the  action  will  lie."  A  partner  cannot, 
however,  by  himself  assuming  all  the  outstanding  debts  due  the  firm, 
without  any  agreement  or  notice  to  his  co-partner,  maintain  as- 
sumpsit against  him  for  any  balance  which  may  be  due.'" 

In  Georgia  it  has  been  held  that  one  partner  may  sue  another 
at  law,  and  recover  if  he  is  able  to  show  that  the  jiffairs  of  the 
concern  are  so  settled  that  the  jury  can  ascertain  what  is  justly 
due  him,  and  settle  the  rights  in  dispute."  So,  in  a  Michigan  case, 
where  there  were  no  assets  remaining  after  payment  of  the  debts, 
it  was  held  that  the  liability  of  one  partner  for  money  advanced 
by  the  other  beyond  his  share  of  the  debts  after  dissolution  was  a 
simple  money  demand,  which  could  be  settled  in  an  action  at  law.^- 
The  court  said:  "There  was  no  occasion  for  an  accounting  in  equity, 
unless  there  had  been  such  dealing  with  assets,  as  well  as  such 
private  relations  with  the  firm,  as  to  make  a- settlement  otherwise 
diflBcult;  and  there  being  only  two  partners  concerned,  and  dis- 
covery being  now  obtainable  as  well  at  law  as  in  equity,  there 
would  seem  to  be  no  very  good  reason  why  the  remedy  at  law 
would  not  be  entirely  adequate.  Rut,  whether  this  would  be  diffi 
cult  or  not,  it  would  be  admissible  to  resort  to  it." 
Same — Partnei'ship  in  Single  Transactions. 

In  Pettingill  v.  Jones,"  Brewer,  J.,  said:  "AATiere  there  is  but 
a  single  partnership  transaction,  one  joint  venture,  which  is  fully 
closed,  we  think  one  partner  may  maintain  an  action  against  tht- 
other  for  his  share  of  the  profits  of  that  single  transaction,  and 
that  in  such  a  case  there  is  no  necessity  of  a  formal  accounting  be- 
tween parties."  "  In  Rhode  Island  an  action  to  recover  one-third 
of  the  losses  of  a  land  speculation  was  decided  the  same  way." 

29  Id. 

«o  Williams  t.  Henshaw,  12  Tick.  (Mass.)  378*. 

»i  Pool  V.  Perdue,  44  Ga.  454. 

»2  Wheeler  v.  Arnold,  30  Mich.  304,  306. 

88  28  Kan.  535.    See,  also,  Clarke  v.  Mills.  36  Kan.  393.  13  Pac.  569. 

84  Citing  Sikes  v.  Work,  6  Gray  (Mass.)  433;   Wheeler  v.  Arnold,  30  Mich.  :304. . 

8  8  Fry  V.  Potter,  12  R.  I.  542,  citing  Robson  v.  Curtis,  1  Starkie,  N.  P.  78;  Buck- 
ner  v.  Ries,  34  Mo.  357;  Wright  v.  Cumpsty,  41  Pa.  St.  102.  See,  also,  Kutz  v. 
DreibelWs,  126  Pa.  St.  335,  17  AU.  609.     But  cf.  Dowling  v.  Clarke.  13  K.  1.  134. 


808  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

The  court  said:  "There  was  no  general  co-partnership,  but  only  an 
agreement  to  share  the  gains  and  losses  of  a  particular  adventure, 
the  entire  capital  for  which  was  furnished  by  the  plaintiff's  testa- 
tor. There  were  no  joint  debts  or  liabilities,  and  no  mutual  claims 
subsisting  to  be  adjusted.  The  transaction  was  closed,  and  the 
losses  ascertained.  Nothing  remained  for  the  defendant  to  do  but 
pay  his  share  of  them.  The  case  is  not  intrinsically  distinguishable 
from  an  ordinary  case  in  assumpsit,  and,  even  without  precedent, 
we  should  have  little  diflQculty  in  maintaining  the  action."  Bates 
says:  ^*  "This  exception  is  not  clearly  established,  for  some  of  the 
cases  are  not  true  partnership,  but  are  mere  joint  ventures.  The 
courts  at  one  time  apparently  were  in  the  habit  of  calling  any 
contract  relation  a  partnership  in  which  an  accounting  could  be 
demanded." 

Sa/me — Single  Unadjmted  Item. 

Where  a  partnership  has  been  dissolved,  and  tiie  partners  have 
accounted  with  each  other  as  to  everything  except  as  to  one  item, 
one  may  maintain  an  action  at  law  against  the  other  for  his  share 
of  the  item.'^ 

SAME— UNDER  THE  CODE. 

129.  The  codes  of  procedure  abolishing  the  distinctions  be- 
tween actions  at  law  and  suits  in  equity  do  not 
authorize  the  maintenance  of  an  action  by  one  part- 
ner against  his  co-partner  for  money  due  on  an 
unsettled  partnership  account. 

Under  the  reformed  codes  of  procedure,  there  is  but  one  form  of 
action,  called  a  "civil  action,"  and  this  action  embraces  all  that 
was  formerly  comprehended  both  by  actions  at  law  and  suits  in 
equity.  In  equity,  a  partner  could  sue  his  co-partner,  and  obtain 
an  adjustment  of  the  partnership  affairs,  and  thus  recover  his  whole 

8  8  Tartn.  §  8G5. 

8  7  Whetstone  t.  Shaw,  70  Mo.  575;  Purvines  v.  Champion,  07  111.  459;  Farwell 
T.  Tyler,  5  Iowa,  535;  Brown  v.  Agnew,  6  Watts  &.  S.  (Pa.)  235.  One  partner 
may  sue  another  for  his  interest  in  a  note  when  it  does  not  appear  from  the  plead- 
ings that  there  were  any  partnership  transactions  to  be  settled,  except  the  diTistioo 
of  such  note.    Moran  t.  Le  Blanc,  6  La.  Ana.  Wi. 


§    130)  ACTIONS    BETWEEN    FIRMS    WITH    COMMON    MEMBER. 


309 


interest  therein.  He  can  do  the  same  thing  under  the  code,  but 
the  action  does  not  thereby  become  an  action  at  law;  nor  can 
the  suit  be  maintained  unless  the  case  made  by  the  pleadings  and 
proof  is  such  as  would  formerly  have  called  for  the  interposition 
of  a  court  of  equity.  It  is,  as  formerly,  an  appeal  to  the  power  of 
a  court  of  chancery;  and  the  case  will  fail  if  it  be  not  such  as 
gives  a  right  to  invoke  that  power.  It  is  a  mistake  to  suppose  that, 
under  the  code,  a  suit  may  be  maintained  which  must  formerly  have 
failed  both  at  law  and  in  equity." 

ACTIONS  BETWEEN  FIRMS  WITH  COMMON  MEMBER. 

130.  No  action  at  law  can  be  maintained  on  an  obligation 
between  two  firms  having  a  common  member,  but 
a  remedy  may  be  had  in  equity. 

This  rule  follows  as  a  corollary  to  the  rule  that  a  partner  can 
not  maintain  an  action  against  his  co-partner  upon  a  partnership 
claim  or  liability.     The  objections  to  the  maintenance  of  such  an 

3  8  Page  V.  Thompson,  33  Ind.  137.  Uudcr  tJie  statutes  of  Minnesota,  one  part- 
ner cannot  demand  merely  a  judgment  for  money  against  a  co-partner  any  more 
than  he  could  have  maintained  an  action  at  law.  Russell  v.  Minnesota  Outfit,  1 
Minn.  1C2  (Gil.  13G).  See,  also,  Crosby  v.  Timolat,  50  Minn.  171,  52  N.  W.  520. 
"By  the  Code,  the  distinction  between  actions  at  law  and  suits  in  equity  is  abol- 
ished. The  course  of  proceeding  in  both  classes  of  cases  is  now  the  same.  Wheth- 
er the  action  depend  upon  legal  principles  or  equitable,  it  is  still  a  civil  action,  to 
lie  commenced  and  prosecuted  without  reference  to  this  distinction.  But,  while  this 
is  so  in  reference  to  the  form  and  course  of  proceeding  in  the  action,  the  principles 
by  which  the  rights  of  the  parties  are  to  be  determined  remain  unchanged.  The 
('ode  has  given  no  new  cause  of  action.  In  some  cases  parties  are  allowed  to 
maintain  an  action  who  could  not  have  maintained  it  before;  but  in  no  case  can 
such  an  action  be  maintained  where  no  action  at  all  could  have  been  maintained 
before  upon  the  same  state  of  facts.  If,  under  the  former  system,  a  given  state  of 
facts  would  have  entitled  a  party  to  a  decree  in  equity  in  his  favor,  the  same  state 
of  facts  now,  in  an  action  prosecuted  in  the  manner  prescribed  by  the  Code,  will 
entitle  him  to  a  judgment  to  the  same  effect.  If  the  facts  are  such  aa  that,  at  the 
common  law,  the  party  would  have  been  entitled  to  judgment,  he  will,  by  proceed- 
ing as  the  Code  requires,  obtain  the  same  judgment.  The  question,  therefore,  is 
whether,  in  the  case  now  under  consideration,  the  facts,  as  they  are  assumed  to  be, 
would,  before  the  adoption  of  the  Code,  have  sustained  an  action  at  law  or  a  suit 
in  equity."    Cole  v.  Reynolds,  18  N.  Y.  74,  76.     Cf.  post,  p.  313. 


310  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

action  are  equally  fatal  to  an  action  between  two  firms  liaving  a 
common  member.  Owing  to  the  nonrecognition  of  the  firm  as  an 
entity,  such  an  action,  of  course,  would  be  one  between  a  partner 
and  his  firm  on  a  partnership  account,  and  the  fact  that  there  are 
other  co-partners  does  not  alter  the  case  in  the  least.  There  is 
the  same  necessity  for  taking  the  partnership  accounts,  and  the 
same  necessity  for  joining  the  common  partner,  both  as  a  plaintiff 
and  as  a  defendant.  The  cases  are  unanimous  in  holding  that,  un- 
der these  circumstances,  the  action  cannot  be  maintained  at  law, 
and  they  are  equally  unanimous  in  holding  that  a  remedy  exists  in 
equity.  But  here  the  unanimity  ceases,  and  upon  the  question  of 
how  equity  will  proceed  to  enforce  the  rights  of  the  parties  the 
few  cases  that  exist  show  much  confusion  and  conflict. 

The  confusion  seems  to  have  been  caused  by  the  failure  to  dis- 
tinguish between  the  question  of  what  rights  equity  will  enforce, 
and  the  entirely  distinct  question  of  how  those  rights  will  be  en- 
forced.'® The  difficulty  has  been  assumed  to  be  merely  a  technical 
one,  growing  out  of  the  common-law  rule  that  all  the  members  of 
a  fimi  must  unite  in  bringing  an  action,  and  the  consequent  neces- 
sity of  making  the  common  partner  both  a  plaintiff  and  a  defend 
ant.  But  the  difficulty  lies  deeper.  It  is  admirably  stated  by 
Mr.  James  Parsons  as  follows:*"  "The  difficulty,  however,  does 
not  arise  from  procedure,  and  is  not  obviated  by  a  resort  to  a  rem- 
edy in  equity.*^  The  obstacle  ia  equally  fnniiidable  in  equity.  The 
common  member  of  two  firms  must  be  put  by  the  decree  in  one 
firm  or  the  other.     If  he  is  held  a  plaintiff,  he  may  be  the  debtor 

»•  This  distinction  was  recognized  in  a  recent  case,  where  the  action  was  under 
the  Code.  The  court  said:  "At  present  the  question  is  not  how  the  matter  is  to  be 
adjusted,  or  what  recovery  shall  be  allowed,  but  only  as  to  whether  the  action  can 
be  maintained  at  all."    Crosby  v.  Timolat,  50  Minn.  171,  52  N.  W.  526. 

40  Partn.  §  162. 

*i  Nor  do  codes  abolishing  the  distinctions  between  actions  at  law  and  suits  in 
equity  obviate  the  difficulty.  They  do  not  profess  to  create  new  causes  of  action. 
But  see  post,  p.  313,  and  note  4G.  Mr.  Pollock,  speaking  of  the  English  statute  au- 
thorizing suits  against  partnerships  in  the  firm  name,  says  that  such  statute  does 
not  introduce  an3rthing  that  amounts  to  the  recognition  of  the  firm  as  an  artificial 
person,  distinct  from  its  members,  and  that  actions  between  a  firm  and  one  of  its 
own  members,  or  between  two  firms  having  a  oobuuod  member,  remain  inadmissible 
in  England.    Partn.  art.  67,  pp.  121.  122. 


§    130)  ACTIONS    BETWEEN    FIRMS    WITH    COMMON    MEMBER.  311 

in  the  defendant  firm,  and  a  decree  might  enable  him  to  compel 
his  co-partners,  who  are  already  his  creditors  in  the  defendant  firm, 
to  pay  an  additional  debt  for  him.  He  might  collect  the  debt  out 
of  their  separate  estate,  or  he  nii,i;ht  turn  around  and  j)ay  it  him- 
self, by  setting  off  his  debt,  release  his  co-partners  defendants,  com- 
pound the  debt,  or  delay  its  collection,  at  his  discretion;  and  the 
only  redress  of  his  plaintiff  co-partners  would  be  an  account.  If 
he  is  made  a  defendant,  he  is  excluded  from  the  plaintiff  firm  by  his 
co-partners,  although  he  is  entitled  to  a  share  of  its  property,  and 
to  a  joint  control  in  the  business.  He  is  compelled  to  pay  his  co- 
partners in  the  plaintiff  firm,  not  their  quota  of  the  claim,  but  the 
whole  amount,  which  is  more  than  they  could  receive  if  it  was  his 
individual  debt.  They  might  collect  all  from  him.  Tliey  might 
seize  and  sell  his  separate  estate  to  pay  the  debt.  He  might  be  a 
creditor  of  his  co-partners,  and  yet  they  would  collect  more  out  of 
him,  instead  of  setting  off  what  they  owed  him  in  payment  of  the 
claim." 

Mr.  Parsons  comes  to  what  seems  the  only  logical  conclusion,  viz. 
that  the  equities  of  each  individual  partner  must  be  worked  out, 
although  this  involves  a  dissolution  of  both  firms.*^  In  this  con- 
clusion he  is  supported  by  a  writer  in  the  American  Law  Review,*' 
and  by  the  case  of  Rogers  v.  Rogers;**    and  this  view  is  the  only 

4  2  Partn.  §  163.  In  Oosby  v.  Tiraolat,  50  Minn.  171,  174.  52  N.  W.  52G,  the 
court  said:  "Nor,  at  law,  would  the  contract  or  agreement  between  the  two  firms 
having  a  common  member  be  recognized  as  creating  a  legal  obligation  or  cause  of 
action.  The  transaction  would  be  treated  as  an  attempt  by  a  party  to  enter  into 
contract  with  himself.  The  remedial  system  of  the  common  law  was  too  inflexible 
and  restricted  to  enable  it  to  adjust  the  complex  rights  and  obligations  of  the  par- 
ties under  such  circumstances.  But,  in  equity,  the  agreements  of  the  members  of 
firms  so  related  to  each  other  were  treated  as  obligatory;  and  the  fact  that  one  of 
the  parties  to  the  joint  contract  stood  in  the  position  of  both  an  obligor  and  obligee 
did  not  stand  in  the  way  of  affording  such  relief  or  remedy  as  might  be  found  to  be 
appropriate  and  necessary  to  the  ends  of  justice."  See,  in  addition  to  cases  cited  in 
this  case,  Hall  v.  Kimball.  77  111.  161;  Beacannon  v.  Liebe,  11  Cr.  443,  5  Pac.  273. 
Where  one,  who  is  a  member  of  two  firms,  makes  a  note  in  the  name  of  one  of  the 
firms,  payable  to  a  member  of  the  other  firm,  the  payee  may  sue  and  recover  upon 
it  in  his  own  name.  Moore  v.  Gano,  12  Ohio,  300.  After  the  death  of  a  person 
who  was  partner  in  two  firms,  the  survivors  of  one  may  maintain  an  action  against 
the  survivors  of  the  other  partnership.      Lacy  v.  Le  Bruce,  6  Ala.  904. 

*•  Volame  5,  p.  47.  **  5  Ired.  Bq.  (N.  C.)  31. 


312  ACTIONS    BETWEEN    PABTNEBS.  (fih.   7 

one  consistent  with  the  rule  as  to  actions  between  partners  all  of 
the  same  hrni,  where,  as  has  been  seen,  the  only  action,  either  at 
law,  in  equity,  or  uuder  the  code,  that  a  partner  can  maintain  against 
his  co-partner  upon  a  partnership  obligation,  is  an  action  for  an 
accounting  and  settlement  of  the  affairs  of  the  firm.  In  the  case 
of  Rogers  v.  Rogers,  the  court  says:  "If,  however,  John  C.  Rogers 
[the  common  partner]  should  refuse  to  become  paymaster  to  John 
C.  Rogers  &  Co.  [the  creditor  firm],  or  be  already  so  far  a  debtor 
to  that  firm  that  the  other  members,  Hugh  Rogers  and  Lowe,  are 
unwilling  to  take  him  alone  for  the  debt  of  Rogers  &  Otey,  then 
their  course  is  to  stop  their  business;  and,  upon  the  settlement  of 
it,  this  debt  of  Rogers  &  Otey  will,  as  a  part  of  the  assets,  be 
allotted  to  one  of  the  partners  in  his  share,  and  he  can  have  relief 
on  his  own  bill."  In  this  case,  the  plaintilT,  John  C.  Rogers,  was 
a  member  of  the  firm  of  John  C.  Rogers  &  Co.,  and  also  of  the  firm 
of  Rogers  &  Otey.  The  latter  firm  having  become  indebted  to  the 
former,  a  suit  in  equity  was  brought  in  the  same  finu.  a:*  though 
the  two  firms  were  composed  of  strangers.  Rutlin,  C.  J.,  before 
whom  the  cause  came,  emphatically  denied  that  such  suit  could  be 
maintained.  "It  is  unnecessary,"  he  says,  "to  consider  the  various 
matters  stated  in  Otcy's  answer  that  might  affect  the  merits  of  the 
controversy  as  between  him  and  the  other  parties,  as  it  is  impossible 
that  there  can  be  any  decree  for  the  plaintiffs  on  this  bill.  It  seems 
to  have  been  drawn  on  some  vague  sort  of  notion  that  the  firms 
are  in  the  nature  of  corporations,  and  that  one  of  them  might  have 
a  decree  against  the  other  as  firms.  The  bill  involves  the  absurdity 
of  a  man's  having  a  personal  decree  against  himself  for  a  sum  of 
money;  and  that,  too,  coupled  with  a  decree  against  another  per- 
son in  such  a  manner  as  to  enable  the  supposed  creditors  to  raise 
the  whole  debt  out  of  this  latter  person,  although,  as  between  that 
person  and  his  partner  (who  is  also  a  partner  in  the  other  firm), 
it  might  appear,  upon  taking  the  accounts  of  tlicir  firm,  that  tlie  hit- 
ter holds  the  fund  out  of  which  the  debt  ought  to  be  paid."  *Tji 
the  present  state  of  things,  the  court  does  not  see,  nor  can  the  ac- 
counts be  taken  that  will  enable  the  court  to  see,  who  is  the  prop- 
er person  to  pay,  and  to  receive  this  money.  It  may  be  that  John 
C.  Rogers  [the  common  partner]  is  the  hand  in  the  firm  of  Rogers 
&  Otey  from  which  the  money  ought  to  go,  and  also  that  in  the 


§    130)  ACTIONS    BETWEEN    FIRMS    WITH    COMMON    MEMBER.  313 

Other  firm  which  ought  to  hold  it.  There  can  therefore  be  no  de- 
cree for  the  plaintiffs.  Not  one  against  Otey  alone,  because  no 
several  liability  on  his  part  is  alleged,  nor  anything  to  except  John 
C.  Rogers  from  paying  or  contributing  to  payment  of  the  debt;  and 
not  one  against  Rogers  by  himself,  or  jointly  with  Otey,  because 
it  would  be  to  pay  John  C.  Rogers  himself  jointly  with  others,  and 
lor  that  reason  would  be  repugnant,  absurd,  and  void."  *' 

Bates  states  the  opposite  view  as  follows:  "In  equity,  however, 
and  under  the  codes,  where  equitable  remedies  will  be  granted  in 
the  courts  in  all  actions,  the  firms  can  be  parties  to  such  suits 
much  as  if  they  constituted  distinct  legal  bodies,  although  there 
is  a  partner  common  to  each;  and  hence,  under  the  code,  which 
administers  equitable  legal  remedies  without  distinction,  the  suit 
can  be  sustained."  *"  This  is,  perhaps,  the  general  statement  of 
the  rule  by  text  writers  and  judges.  It  is  obviously  open  to  the 
criticism  that  it  confuses  the  question  of  what  rights  will  be  rec- 
ognized in  equity,  with  the  question  of  how  those  rights  will  be 
enforced.  The  firm  can  no  more  sue  as  such  in  equity  than  at 
law,  nor  does  the  code  change  this  rule.*^  However  much  the  fact 
of  partnership  may  be  taken  into  view  in  adjusting  the  rights  of 
the  partners,  still  the  suit  is  one  between  individuals  only.  Cole  v. 
Reynolds**  is  the  leading  case  in  support  of  this  view.  Two  firms, 
in  each  of  which  A.  waa  a  partner,  stated  an  account  of  their  mutual 

«»  See,  also,  to  same  effect,  Enplls  v.  Furniss.  4  E.  D.  Sinitli  (N.  Y.)  5vS7. 

*«  Partn.  §  IX>5.  In  Pennsylvauia  it  is  provided  by  statute  that  pirtnera  may  be 
both  plaintiffs  and  defendants  in  the  same  action.  Act  April  14,  1838  (Pepper  &  L. 
Dig.  1894,  "Partnership,"  §  3).  Spealiing  of  this  act,  Mi.  J.  Parsons  says:  "The 
act  does  not  enable  a  partner  to  sue  his  firm.  (Ace.  Hall  v.  Logan,  34  Pa.  St.  331.) 
An  independent  plaintiff  is  required,  who  is  not  also  liable  on  the  contract  which  he 
seeks  to  enforce.  The  evil  is  more  extensive  than  the  remedy  provided.  The  lim- 
ited scope  and  technical  character  of  the  statute  make  the  form  of  procedure  con- 
trol the  right."  Partn.  §  IGl.  Party  joining  in  promise  cannot  sue  his  co-prom- 
isors. Price  T.  Spencer  (1870)  7  Phila.  179;  Wentworth  v.  Raignel  (1873) 
9  Phila.  275.  Cf.  Duff  v.  Maguire,  107  Mass.  87,  and  Bry.ant  v.  Wardell,  2 
Exch.  479.  In  an  action  under  the  statute,  where  the  same  person  is  joined  with 
plaintiff  and  with  defendant,  the  execution  is  limited  to  the  joint  assets.  Tassey  t. 
Church,  6  Watts  &  S.  (Pa.)  4C5.  Cf.  Cole  v.  Reynolds,  18  N.  Y.  74,  where  practi- 
cally the  same  result  was  reached  without  any  statute. 

♦  T  See   ante,  p.  310.  48  ig  n.  Y.  74. 


314  ACTIONS    BETWEEN    PARTNERS.  (Ch.    7 

dealing.  The  partners  in  the  creditor  firm,  with  the  exception  of 
A.,  who  declined  to  be  plaintiff,  and  was  made  a  defendant,  brought 
their  action  against  the  members  of  the  debtor  firm;  and  it  was 
held  that,  upon  proof  of  these  facts,  the  plaintiffs  were  entitled  to 
judgment  for  the  balance  thus  ascertained,  and  that  it  was  not 
necessary  in  such  a  case  that  the  complaint  should  propose  an  ac- 
counting as  between  the  firms  or  the  various  partners,  but  that  such 
accounting  might  be  directed  by  the  court  if  facts  were  pleaded  and 
shown  that  would  render  it  inequitable  to  permit  a  recovers  by  one 
firm  against  the  other,  without  adjusting  the  accounts  of  the  indi- 
viduals composing  them.  Even  in  such  case  the  court  thought  that 
the  better  doctrine  would  be  to  let  the  debtor  firm  pay  its  debt,  and 
the  partners  in  the  creditor  firm,  after  receiving  their  debt,  adjust 
their  individual  equities  among  themselves.  The  effect  of  this  de- 
cision was  to  hold  that  two  of  the  partners  might  have  judgment 
against  the  debtor  firm,  including  their  own  co-partner,  for  a  debt 
due  to  their  own  firm,  the  debt  so  recovered  to  be  held  as  assets  of 
the  firm,  and  that  this  might  be  done  without  an  accounting,  except 
as  between  the  two  firms.  By  such  a  decree,  the  common  partner  is 
deprived  of  all  possession  and  control  of  a  portion  of  the  partnership 
property, — a  right  inherent  in  the  relation  of  partnership.  The  court 
solves  the  diflBculty  arising  from  his  being  a  member  of  both  firms 
by  completely  ignoring  his  rights  in  the  creditor  firm,  and  treating 
him  only  as  a  debtor. 

ACTION  AT  LAW  ON  INDIVIDUAL  OBLIGATION. 

131.  A  partner  may  maintain  an  action  at  la-wr  ag-ainst 
his  co-partner  upon  a  claim  due  to  the  one  from 
the  other  as  individuals.  The  following  classes  of 
cases  fall  -within  the  above  rule: 

(a)  Claims  not  connected  with  the  partnership  (p.  315). 

(b)  Claims  for  an  agreed  final  balance  (p.  315). 

(c)  Claims  upon  express  personal  contracts  between  part- 

ners (p.  317). 


§    133)  CLAIMS    FOR    AGREED    FINAL    BALANCES.  315 


SAME  -CLAIMS    NOT  CONNECTED  WITH   PARTNERSHIP. 

132.  A  partner  may  maintain  an  action  at  law  against  his 

co-partner  upon  claims  not  connected  -with  the 
partnership. 

It  is  hardly  necessary  to  say  that  the  mere  fact  that  persons  are 
partners  as  to  certain  transactions  is  no  defense  to  an  action  be- 
tween them  upon  a  claim  in  no  manner  connected  with  the  partner- 
ship aliairs.  As  to  matters  ontside  of  the  partnership  business, 
they  are  not  partners,  and  may  sue  ajid  be  sued  precisely  as  stran- 
gers. Thus,  where  one  partner  has  sold  his  separate  property  to 
hia  co-partner,  he  may  maintain  an  action  at  law  for  the  price.*" 

SAME— CLAIMS  FOR  AGREED  FINAL  BALANCES. 

133.  A  final  settlement  of  the  partnership  affairs  converts 

the  liabilities  between  each  partner  and  the  firm 
into  liabilities  between  the  partners  individually, 
and  an  action  at  law  lies  to  recover  the  balance 
found  due  any  partner. 

It  has  been  seen  that  a  partner  cannot  maintain  an  action  at  law 
for  a  balance  on  the  partnership  account  until  the  accounts  have  been 
settled  and  adjusted.  But  where  the  partners  themselves  state  the 
account,  and  agree  u])on  the  balances  due  any  partner,  all  objection 
to  the  maintenance  of  an  action  at  law  is  removed.  The  settlement 
converts  the  liabilities  between  each  partner  and  the  firm  into  lia- 
bilities between  the  parties  as  individuals,  and  an  action  at  law  may 
be  maintained  thereon."  To  have  this  eli'ect,  however,  the  settle- 
rs Elder  ▼.  Hood,  38  111.  533. 

60  Purvines  v.  Champion,  67  111.  459;  Hanks  v.  Baber,  53  111.  1^92;  Fanning  v. 
Chadwick,  3  Pick.  420;  Williams  v.  Henshaw,  11  Pick.  79;  Scott  t.  Caruth,  50  Mo. 
120;  Holman  v.  Nance,  84  Mo.  674;  Knerr  v.  Hofluinn,  65  Pa.  St.  126;  Mackey  v. 
Auer,  8  Hun  (N.  Y.)  180;  Jaques  v.  Hulit,  16  .N.  J.  Law,  38;  Nims  v.  Bigelow,  44 
N.  H,  376;  McGehee  v.  Dougherty,  10  Ala.  863;  Wray  v.  Milestone,  5  Mees.  &  W. 
21;  Hnldfrman  v.  Halderman,  Hemp.  559,  Fed.  Cas.  No.  5,909.  In  the  above  cases 
there  was  no  express  promise  to  pay  the  balance  due.    In  a  number  of  cases  it  hjis 


316  ACTIONS    BETWEEN    PARTNERS.  (Ch.  7 

ment  must  be  a  final  winding  up  of  the  partnership  affairs.'*  A 
partial  settlement  will  not  support  an  action  at  law,  unless  there  is 

been  said  that  proof  of  an  express  promise  to  pay  the  balance  is  necessary  to  main- 
tain the  suit;  but  this  is  not  the  better  view.  See  Gulick  v.  Gulick,  14  N.  J.  Law, 
578;  Murray  v.  Bogert,  14  Johns.  (N.  Y.)  318;  Clark  v.  Dibble,  16  Wend.  (N.  Y.) 
601;  Koehler  v.  Brown,  31  How.  Prac.  (N.  Y.)  235;  Goldsborough  v.  McWilliams, 
2  Cranch,  C.  C.  401,  Fed.  Gas.  No.  5,518;  Foster  v.  Allanson,  2  Term  R.  479.  A 
partner  may  maintain  an  action  at  law  against  his  co-partner  for  an  amount  found 
to  be  due  him  upon  a  settlement  and  account  stated,  without  proof  of  an  express 
promise  to  pay  such  balance.  Wycoff  v.  Purnell,  10  Iowa,  3o'2.  See,  also,  Furvines  v. 
Champion,  67  111.  459;  Cochrane  v,  Allen,  58  N.  H.  250.  One  of  many  persons  who 
had  agreed  to  pay  a  subscription  in  installments  to  push  a  joint  enterprise,  shaiing 
profits,  but  losses  to  affect  each  of  them  only  to  the  amount  of  his  subscription, 
having  defaulted  in  his  second  installment  after  promising  another  partner  to  pay 
it,  such  other  partner,  after  advancing  money  for  the  expenses  of  the  enterprise, 
may  sue  the  first,  as  being  liable  on  an  account  stated,  although  he  could  not  be 
sued  on  partnership  accounts.  Brown  v.  Tapscott,  6  Mees.  &  W.  119.  When 
parties  buying  and  selling  wool  together  as  partners  settle  their  accounts,  in  which 
appears  an  item  charging  one  of  them  with  £15  "loss  on  wool,"  and  the  latter 
party  expressly  assents  to  the  charge,  an  action  is  maintainable  to  recover  the 
amount.  In  such  an  action  it  is  no  answer  that  the  plaintiff  agreed  to  take  the 
money  out  in  butcher's  meat.  Wray  v.  Milestone,  5  Mees.  &  W.  21,  Lord  Abinger, 
C.  B.,  and  Parke,  Alderson,  and  Maule,  BB.  Where  a  partnership  has  been  dis- 
solved, and  in  the  settlement  one  partner  has  become  the  owner  of  the  accounts 
payable  to  the  firm,  such  partner  may  maintain  an  action  at  law  against  the  other 
for  moneys  collected  and  withheld  from  him.  Glade  v.  White,  42  Neb.  336,  60  N. 
W.  556.  "It  is  the  law  that  one  partner  cannot  sue  another  to  recover  profits  or  to 
recover  his  share  of  partnership  assets  where  the  patnership  is  unsettled,  although 
he  may  sue  for  an  accounting  and  for  the  recovery  of  whatever  may  be  found  due 
on  a  settlement  of  the  partnership  affairs.  But  this  rule  does  not  apply  to  all  cases 
growing  out  of  partnership  contracts.  Where  there  is  an  agreement  adjusting  part- 
nership affairs,  and  that  agreement  awards  to  one  partner  a  specific  sum,  or  creates 
a  specific  duty  in  his  favor,  he  may  maintain  an  action  upon  a  breach  of  the  duty  or 
promise.  Snyder  v.  Baber,  74  Ind.  47;  Waning  v.  Hill,  89  Ind.  497;  Lawrence  v. 
Clark,  9  Dana  (Ky.)  257;  Foster  v.  Allanson,  2  Term  R.  479;  Wright  v.  Hunter, 
1  East,  20;  Neil  v.  Greenleaf,  26  Ohio  St.  567;  Wells  v.  Carpenter,  65  111.  447." 
Douthit  V.  Doutbit  (Ind.  Sup.)  32  N.  E.  715.  Where  partners  agree,  under  seal,  to 
dissolve,  and  that  one  of  them  shall  have  all  the  debts  due  the  firm,  he  may  main- 
tain general  assimapsit  against  the  others  for  a  debt  due  from  them  to  the  firm. 
Beede  v.  Fraser,  66  Vt  114,  28  Atl.  880. 

61  Burns  v.  Nottingham,  60  111.  531;  Ross  v.  Cornell,  45  Cal.  133;  Arnold  v, 
Arnold,  90  N.  Y.  580;  De  Jarnette's  Ex'r  v.  McQueen,  31  Ala.  230.  As  to  what  is 
a  final  settlement,  see  Bates,  Partn.  §^  859,  860. 


§    134)  EXPRESS    CONTRACTS    BETWEEN    PARTNERS.  317 

an  express  promise  to  pay  the  balance  found  due.'''  But,  where  the 
settlement  is  a  final  winding  up  of  the  partnership  affairs,  the  law 
will  imply  a  promise  to  pay  the  balance."^  If,  after  a  final  settle- 
ment, the  business  is  nevertheless  continued,  an  action  cannot  be 
maintained  to  recover  the  agreed  balance  unless  there  was  an  express 
promise  to  pay  if*  But  where  there  was  an  express  promise  to  pay 
the  balance,  as  where  a  note  is  given  for  the  amount  found  due,  an 
action  may  be  maintained,  though  the  business  is  carried  on."' 

SAME— EXPRESS  CONTRACTS  BETWEEN  PARTNERS. 

134.  A  partner  may  sue  his  co-partner  at  law  upon  an  ex- 
press contract  between  them  by  which  the  defend- 
ant bound  himself  personally  to  the  plaintiff. 

Where  persons  who  are  partners  have  contracted  together  on  their 
own  behalf,  and  not  on  behaK  of  their  firm,  and  the  transaction  is  not 
such  a  one  as  the  firm  would  have  a  right  to  take  advantage  of,  the 
rights  and  obligations  created  are  individual  rights  and  obligations, 
and  an  action  at  law  may  be  maintained  upon  the  contract."®     It  is 

»«  Davenport  v.  Gear,  3  111.  495;  Burns  v.  Nottingham,  GO  111.  531;  Westerlo  v. 
Evertson,  1  Wend.  (N.  Y.)  532;    Murdock  v.  Martin,  12  Smedes  &  M.  661. 

B3  See  cases  cited  supra,  notes  50,  51. 

•  4  Allan  V.  Garven,  4  U.  C.  Q.  B.  242;    Fromont  t.  Coupland,  2  Bing.  170. 

BO  Preston  v.  Strutton,  1  Aust.  50;  Sturges  v.  Swift,  32  Miss.  239;  McSherry 
V.  Brooks,  46  Md.  103;  Rockwell  v.  Wilder,  4  Mete.  (Mass.)  556;  Van  Amringe  v. 
Ellmaker,  4  Pa.  St.  2S1. 

5«  Bedford  v.  Brutton,  1  Bing.  N.  C.  399;  Ryder  v.  Wilcox,  103  Mass.  24.  Any 
partner,  ultimately  bound  for  the  partnership  debts,  may  sue  his  co-partner  to  apply 
the  partnership  property  to  such  debts.  Gridley  t.  Conner,  2  La.  Ann.  87.  Action 
at  law  may  be  maintained  for  breach  of  an  express  contract  between  the  partners. 
Sprout  T.  Crowley,  30  Wis.  187.  Action  at  law  may  be  maintained  for  breach  of 
contract  independent  of  partnership.  Mullany  v.  Keenan,  10  Iowa,  224.  If  a 
contract,  though  made  concerning  the  partnership  affairs,  and  in  furtherance  of  the 
joint  undertaking,  is  the  individual  contract  of  the  partners  who  are  parties  to  it, 
and  if  it  is  made  by  them  in  their  own  names,  and  not  in  the  name  of  the  firm,  an 
action  may  be  maintained  thereon  by  one  against  the  others,  during  the  continuance 
of  the  partnership.  Wright  v.  Michie,  6  Grat.  (Va.)  354.  A  partner  may  sue  his 
co-partners  upon  an  independent  contract  made  by  them  aa  a  firm  with  him  before 
the  partnership  was  formed  between  him  and  them.  Mullany  v.  Keenan.  10  Iowa, 
224. 


318  ACTIONS    BKTWEEN    PARTNERS.  (Cll.  7 

immaterial  whether  the  contract  relates  to  the  partnership  business 
or  not,  or  whether  it  was  entered  into  before  the  partnership  was 
formed,  after  it  was  terminated,  or  during  its  continuance.'^  The 
right  of  the  parties  to  such  a  contract  may  be  determined  without  a 
settlement  of  the  partnership  accounts,  and  does  not  involve  the  ne- 
cessity of  making  a  party  both  plaintiff  and  defendant.  The  fact  that 
a  balance  may  be  due  the  defendant  from  the  plaintiff  upon  other 
transactions  involving  a  partnership  accounting  is  immaterial,  for, 
as  has  been  seen,  such  transactions  are  not  a  matter  of  set-ofif.°' 

Illustrations. 

\Miere  the  contract  does  not  relate  to  the  partnership  business, 
the  right  to  maintain  an  action  thereon  is  clear.  But  the  mere  fact 
that  the  contract  does  relate  to  the  partnership  business  does  not 
alter  the  case,  where  the  contract  was  the  individual  contract  of  the 
partners,  and  not  a  contract  of  the  firm."'*     Illustrations  of  cases 

BT  "The  real  tost  is,  not  solely  whether  the  action  can  be  tried  without  going  into 
the  partnership  accounts,  but  whether  the  defendant  has  bound  himself  personally 
to  the  plaintiff."      Bates,  Partn.  §  878.      See.  also.  r;sises  cited  infra. 

68  A  note  given  by  one  partner  to  the  otlier  for  a  balance  in  liquidation  of  the 
affairs  of  the  firm  may  be  the  subject  of  an  action  of  law,  although  there  are  subse- 
quent accounts  in  which  the  payee  may  be  subsequently  found  in  arrears.  Preston 
V.  Struttou,  1  Anstr.  50.  There  are  many  deeds  of  co-partnership  in  which  the 
partners  covenant  each  to  advance  a  certain  sum  at  first.  In  such  case  an  action 
will  lie  by  one  partner  against  the  other  to  enforce  the  covenant,  notwithstanding 
that  there  may  be  subsequent  accounts  between  them  upon  which  a  court  of  equity 
must  adjudicate.  Venning  v,  Leckie,  13  East,  7.  In  this  case  the  defendant 
agreed  in  writing  to  take  one-half  share  of  certain  goods  bought  by  the  plaintiff  on 
their  joint  account,  half  in  the  profit  or  loss,  and  to  furnish  the  plaiutitT  with  half 
the  amount  in  time  for  tlie  payment  thereof,— the  goods  bought  to  be  paid  for  by 
bills.  Whore  one  gives  a  promissory  note  to  his  retiring  partner  for  firm  funds 
advanced  by  the  latter,  and  used  in  the  business,  failure  of  consideration,  based  upon 
the  alleged  facts  that  no  final  settlement  of  the  firm  affairs  has  ever  boon  had,  and 
that  upon  such  settlement  there  would  be  nothing  due  the  payee,  is  no  defense  to 
an  action  at  law  upon  said  note.  Wilson  v.  Wilson,  26  Or.  251,  38  Pac.  185.  One 
who  is  clerk,  and  also  in  partnership  in  a  particular  business  with  his  employer, 
may,  where  his  duties  as  clerk  and  partner  are  distinct,  sue  for  his  salary  due 
nim  in  the  former  capacity  without  resorting  to  a  suit  for  the  settlement  of  the 
partnership  transactions.  Alexander  v.  Alexander,  12  La.  Ann.  588.  A  stipulated 
compensation  may  be  recovered  at  law,  though  payable  out  of  profits.  Hobinson  r. 
Green's  Adm'r,  5  Har.  (Del.)  115. 

69  A  promissory  note  given  by  one  to  another  member  of  a  commercial  company 


§    134)  EXPRESS    CONTRACTS    BETWEEN    PARTNERS.  319 

where  actions  at  law  have  been  allowed  on  contracts  entered  into  by 
partners  before  the  formation  of  the  partnership,  but  relating  to  it, 
are  numerous.  Thus,  an  action  at  law  will  lie  for  breach  of  an 
agreement  to  form  a  partnership,  or  to  continue  a  partnership  for  a 
fixed  time.®"  Where  one  partner  lends  another  money  to  be  used  by 
the  latter  as  his  contribution  to  capital,  the  transaction  is  purely  an 
individual  one,  and  the  money  may  be  recovered  in  an  action  at  law.'^ 
Where  there  is  an  agreement  to  buy  a  half  interest  in  a  stock  of 
goods,  and  to  enter  into  partnership  with  the  seller,  the  interest 
bought  to  be  put  in  as  capitaJ,  the  purchase  price  may  be  recovered 
at  law.  The  purchase  is  not  a  partnership  transaction.  The  inter- 
est must  be  purchased  before  it  can  be  put  in  as  capital.'*  So,  one 
partner  may  sue  his  co-partner  at  law,  and  recover  a  premium  prom- 
ised by  the  latter  to  procure  admission  to  the  firm.*" 

An  action  at  law  between  partners  will  lie  for  breach  of  an  agree- 
ment to  pay  fiiTU  debts  out  of  defendant's  private  funds,  or  to  in 

may  be  sued  on  by  the  payee,  notwithstanding  the  relation  of  parties,  and  the  fact 
that  the  money,  when  recovered,  would  belong  to  the  company.  Van  Ness  v.  For- 
rest, 8  Cranch,  30.  A  partner  may  sell  his  interest  to  his  co-partners,  and  recover 
the  purchase  price  in  an  action  at  law,  and  it  is  immaterial  whether  such  interest 
is  incumbered  or  not  by  the  terms  of  the  partnership,  or  whether  its  amount  Is  fixed 
or  the  price  agreed  on.  Baker  v.  Robinson,  u5  Mo.  App.  171.  See,  also,  supra. 
notes  56  and  57. 

80  The  remedy  for  violation  of  an  agreement  for  a  future  partnership  is  eiclusively 
at  law.  Lane  v.  Roche,  Riley,  Eq.  (S.  C.)  215.  See  Uale  v.  Leckie,  2  Starkie,  107; 
Wilson  V.  Campbell,  10  111.  3S3:  Hill  v.  Palmer,  5G  Wis.  123,  13  N.  W.  20;  Vance 
V.  Blair,  18  Ohio,  532;  Goldsmith  v.  Sachs,  17  Fed.  720.  See,  also,  cases  cited  in 
note  67,  infra.  An  action  lies  to  recover  damages  for  a  wrongful  dissolution.  Dart 
T.  Laimbeer,  107  N.  Y.  004.  14  N.  E.  21)1;  Bagloy  v.  Smith,  10  N.  Y,  48U;  Dunham 
V.  Gillis,  8  Mass.  462;  Reiter  v.  Morton,  96  Pa.  St.  229;  Addams  v.  Tutton.  39 
Pa.  St.  447;  Wadsworth  v.  Manning,  4  Md.  59;  Jones  v.  Morehead,  3  B.  Mon, 
(Ky.)  377. 

81  Helme  v.  Smith,  7  Bing.  709,  714.  An  action  at  law  can  be  maintained  by 
one  partner  against  another  partner  in  the  same  firm,  upon  an  express  promise, 
made  before  the  commencement  of  the  partnership,  in  respect  to  advances  to  be 
made  to  constitute  the  capital  of  the  company  for  the  carrying  on  of  the  business 
of  the  partnership.  Currier  v.  Webster,  45  N.  H.  226.  See,  also,  to  like  effect, 
Smith  V.  Kemp.  92  Mich.  357,  52  N.,W.  639;  Bates  t.  Lane,  62  Mich.  132,  28  N. 
W.  753.    Bull  V.  Coe,  77  Cal.  54,  18  Pac.  808. 

62  Kinney  v.  Robison.  52  Mich.  3S9,  18  N.  W.  120. 
«3  Walker  t.  Harris,  1  Anstr.  245. 


320  ACTIONS    BETWEEN    PARTNERS.  (Cll.   7 

demnifj  plaintiff  from  all  liability  thereon;"  for  breach  of  agree 
ment  to  pay  for  personal  services  out  of  private  funds;""  and  for 
breach  of  agreement  to  render  accounts/*  "An  agreement  to  pay 
money  or  to  furnish  stock  for  the  purpose  of  launching  the  partner- 
ship is  an  individual  engagement  of  each  partner  to  the  other,  and 
the  defaulting  partner  may  be  sued  in  an  action  at  law  upon  his 
agreement.  It  is  entirely  separate  and  distinct  from  the  partner- 
ship accounts,  and  this  forms  the  true  test  in  determining  whether 
an  action  at  law  will  lie  by  one  partner  against  his  co-partner."  •' 

•  4  Schmidt  t.  Glade,  126  111.  485,  18  N.  E.  762;  Shennefield  v.  Dutton.  S5  UL 
503;  Kellogg  v.  Moore,  97  111.  282;  Adams  v.  Funk,  53  111.  219;  Halliday  v.  Car- 
man, 6  Daly  (N.  Y.)  422;  Cilley  v.  Van  Patten,  58  Mich.  404.  25  N.  W.  31iG;  Jewell 
V.  Ketchum.  63  Wis.  G2S,  23  N.  W.  709;  Frow's  Estate.  73  Pa.  St.  459;  Edwards 
T.  Remington,  51  Wis.  336,  8  N.  W.  193;  Miller  •  .  Bailey,  19  Or.  539,  25  Pac.  27. 
A  promise  by  a  continuing  partner  to  reimburse  a  retiring  partner  for  taking  up, 
by  his  individual  note,  a  partnership  note  on  which  the  latter  is  still  liable,  but 
which  the  former  has  at  the  dissolution  promised  to  pay,  will  sustain  an  action;  a 
demand,  whether  necessary  or  not,  having  been  first  made.  Warbritton  v.  Cam- 
eron, 10  Ind.  302.  Generally,  as  to  breach  of  contract  assuming  debt,  Ferguson 
V.  Baker,  116  N.  Y.  257,  22  N.  E.  400;  Thropp  v.  Richardson,  132  Pa.  St.  399,  19 
Atl.  218.  A  bond  given  on  the  dissolution  of  a  firm  by  one  partner  for  the  pay- 
ment of  all  the  firm  debts  can  be  enforced  only  by  the  obligee.  When  one  partner 
indebted  to  the  firm  gives  his  note  to  the  other  therefor,  it  is  a  valid  counterclaim  or 
set-off  In  an  action  on  a  bond  executed  upon  dissolution  of  the  firm  by  the  payee 
to  the  maker  for  the  payment  of  the  partnership  debts.  Merrill  v.  Green,  55  N.  Y. 
270. 

es  Paine  t.  Thacher,  25  Wend.  (N.  Y.)  450;   Aldrich  t.  Lewis,  60  Miss.  229. 

68  Owston  V.  Ogle,  13  East,  538;  Foster  t.  Allanson,  2  Term  R.  479;  Want  v. 
Reece,  1  Bing.  IS;  Ferguson  v.  Baker,  116  N.  Y.  i:57.  22  N.  E.  400;  .Duncan  v. 
Lyon,  3  Johns.  Ch.  (N,  Y.)  351;  Gillen  v.  I'eters,  39  Kan.  489,  18  Pac.  613;  Wilby 
y.  Phinney,  15  Mass.  116;  Holyoke  v.  Mayo,  50  Me.  385;  Bailey  v.  Starke.  6  Ark. 
191;  Rose  v.  Roberts,  9  Minn.  119  (Gil.  109).  But  see  McPherson  v.  Robertson. 
82  Ala.  459,  2  South.  333. 

•  ^  Cook  v.  Canny,  96  Mich.  398,  55  N.  W,  987.  One  partner  may  sue  another  at 
law  on  a  note  given  by  the  latter  to  the  former  for  the  payment  of  a  part  of  the 
capital  stock.  Grigsby's  Ex'r  v.  Nance,  3  Ala.  347;  Scott  v.  Campbell,  30  Ala. 
728.  See,  also,  Sprout  v.  Crowley,  30  Wis.  187;  Brown  v.  Tapscott,  6  Mees.  & 
W.  119.  If,  by  an  agreement  under  seal  between  two  persons,  one  agrees  to 
furnish  a  specified  sum  of  money  to  carry  on  a  certain  business  of  the  parties,  and 
afterwards  fails  to  furnish  the  money,  he  is  liable  to  the  other  at  law  for  such 
breach  of  contract.  Ellison  v.  Chapman,  7  Blackf.  (Ind.)  224.  See,  also,  case.« 
cited  in  note  60,  supra. 


§    134)  EXPRESS    CONTRACTS   BETWEEN    PARTNERS.  321 

A  suit  by  a  partner  against  his  copartner,  upon  a  claim  not  founded 
on  the  plaintiff's  interest  in  the  partnership  assets,  but  arising  from 
a  direct  violation  of  the  articles  of  co-partnership,  need  not  be  de- 
layed for  the  taking  of  an  account  of  the  partnership  affairs.**  A 
partner  satisfying  a  judgment  against  himself  upon  an  indorsement 
made  by  his  co-partner  in  violation  of  the  articles,  is  entitled  to 
reimbursement  for  the  costs  paid  in  such  satisfaction,  as  well  as 
for  the  amount  of  the  judgment  otherwise."® 

Partners  may,  by  special  agreement  touching  any  part  of  the 
partnership's  concerns,  withdraw  the  same  from  the  partnership 
account,  and  make  the  agreement  the  foundation  of  an  action  at 
law.  Thus,  where  one  of  two  partners,  by  agreement  between  them, 
takes  certain  specific  articles  of  partnership  property,  and  agrees 
to  pay  his  co-partner  for  his  share  thereof  a  delinite  sum,  at  a  spec- 
ified time,  the  co-partner  may  maintain  an  action  to  recover  the 
amount  so  agreed  to  be  paid,  independent  of  the  settlement  of  the 
partnership  accounts.'" 

«8  Read  t.  Neritt,  41  Wis.  34S;  Hill  v.  PaJmer,  M  Wis.  V2^,  13  N.  W.  20;  Mo- 
ritz  T.  Peebles,  4  K.  D.  Smith  (N.  Y.)  135;  Kinloch  v.  IlamUn,  li  Hill,  Eq.  (S.  O.) 
10;  nunham  v.  Gillis.  8  Mass.  402;  Hunt  v.  Roiliy.  r.O  Tvx.  9'J;  Uana  v.  Gill,  ". 
.1.  J.  .Miin»h.  (Ky.)  242;  Radenliurst  v.  Bates,  3  Bing.  403.  But  see  Stone  v.  Fousc. 
3  Cal.  292;  Rid^way  v.  Grant,  17  IlL  117.  An  action  at  law  may  be  sustained  by 
one  co-partner  against  another  to  recover  damages  for  a  breach  of  the  articles  or 
terms  of  the  contract.  Terry  v.  Carter,  25  Miss.  IGS;  Kinloch  v.  Hamlin,  2  Hill, 
Eq.  (S.  C.)  19.  One  partner  cannot  maintain  an  action  at  law  on  the  covenants  in 
the  articles  of  co-partnership  to  recover  damages  of  his  co-partner  for  neglect  of  the 
partnership  business,  while  there  is  a  considerable  amount  due  from  him  to  his  co- 
partner, and  the  debts  due  by  and  to  the  lirm,  the  burden  of  which  is  to  be  borne, 
and  the  benefit  enjoyed,  by  the  partners  in  certain  proportions,  are  not  all  set- 
tled. Capen  v.  Barrows,  1  Gray  (Mass.)  376.  See,  also,  Patterson  v.  Burton,  3 
N.  J.  Law,  2S9;  Bracken  v.  Kennedy,  3  Scam.  (111.)  iJ.'iS.  A  suit  at  law  may  be 
maintained  for  a  breach  of  partmrship  articles  where  the  business  of  the  partner- 
ship has  not  been  commenced,  and  there  are  no  accounts  in  dispute  between  the 
partners.  Vance  t.  Blair,  18  Ohio,  532.  Where  one  partner  has  made  profits,  by 
engaging  in  any  other  business  in  violation  of  his  contract,  his  co-partner  has  his 
option  to  sue  for  damages  for  the  breach  of  the  contract,  or  to  bring  a  bill  in  equity 
to  compel  an  accounting.     Moritz  v.  Peebles,  4  £1  D.  Smith  (N.  Y.)  135. 

6  9  Stone  V.  Wendover,  2  Mo.  App.  248. 

TO  Nell  V.  Greenleaf.  26  Ohio  St.  6G7;  Jackson  v.  Stopherd,  2  Gromp.  &  M.  861. 
See,  also,  Roberts  v.  Ripley.  14  Conn.  543;  Russell  v.  Grimes,  46  Mo.  410;  Adams 
▼.  Funk.  53  111.  219.  Where  one  partner  purchases  the  interest  of  the  «ther  part- 
GEO.PART.— 21 


322  ACTIONS    BETWEEN    PARTNERS.  (Ch. 


SAME— LOSSES  CAUSED  BY  PARTNER'S  WRONG. 

135.  A  partner  may  maintain  an  action  at  law  against  his 
co-partner  for  a  loss  caused  by  the  latter's  wrong- 
ful act,  provided, 

(a;  The  plaintiff's  loss  was  suffered  individually,  and 
not  in  his  capacity  as  a  partner,  and 

(b)  The  defendant  would  not  have  been  entitled  to  con- 
tribution had  he  alone  paid  the  loss. 

uer  in  the  concern,  the  sale  dissolves  the  partnership,  and  the  partner  purchasing 
may  be  sued  at  law  for  the  amount  agreed  to  be  paid  by  him  for  auch  Interest. 
l':den.s  V.  Williams,  30  111.  2,">2.  As  to  conversion  of  partnership  property  into  sepa- 
rate property,  see  ante,  p.  277.  As  a  rule,  assumpsit  will  not  lie  by  one  partner 
(igainst  his  co-partner,  in  respect  to  any  matter  connected  with  the  partnership 
transactions,  or  which  would  involve  the  consideration  of  their  partnership  dealing. 
Yet  one  may  sustain  an  action  against  his  co-partner  on  an  express  contract  or  cove- 
nant to  do  or  omit  any  particular  act  not  involving  any  qui'Stion  as  to  the  general 
accounts.  And  when  the  parties,  by  an  exprt-is  agreement,  separate  a  distinct  mat- 
ter from  the  partnership  dealing,  and  one  expressly  agrees  to  pay  the  other  a  speci- 
fied sum  for  that  matter,  assumpsit  will  lie  on  the  agreement,  though  the  matter 
arose  from  the  partnership  d»>aliug.  CoUamer  v.  Foster,  2G  Vt.  754.  "It  is  quite 
clear,"  says  T.  Parsons  on  Partnership  (4th  Ed.,  i  190).  "that  certain  particular 
and  distinct  transactions  may  be  separated  from  the  affairs  or  business  of  the  part- 
nership, by  the  agreement  of  tlie  luirties.  Then  those  persons  who  are  concerned 
in  this  sei>arated  matter  are  not  as  partners  to  each  other,  although  in  all  other  busi- 
ness relations  they  remain  piirtners."  Where  partners  agree  to  divide  a  partner- 
ship debt,  and  the  debtor  assents  to  it,  and  promises  one  of  the  partners  to  pay  him 
his  moiety,  such  partiitT  may  maintain  an  action  for  his  moiety  against  the  debtor. 
I  Lindl.  Partn.  205.  citing  Blnir  v.  Snover,  10  N.  J.  Law,  153.  After  a  dissolu 
tion,  and  a  balance  has  been  struck  and  agreed  upon  by  the  partners,  one  maj 
maintain  assumpsit  against  the  other  to  recover  his  balance  upon  an  implied  prom 
ise.  Spear  v.  Newell,  13  Vt.  288,  292;  Warren  v.  Wheelock,  21  Vt.  323;  Gibson 
v.  Moore,  G  N.  H.  &47;  Wilhy  v.  Phinney,  15  Mass.  121;  Wheeler  v.  Wheeler,  111 
Mass.  247.  Assumpsit  lies  where,  after  dissolution  and  settlement,  one  partner 
received  more  than  was  his  due.  Bond  v.  Hays,  12  Mass.  34.  And  see  Clark  v. 
Dibble.  16  Wend.  (N.  Y.)  601;  Beede  v.  Fraser,  66  Vt.  114.  28  Atl.  880.  "Upon 
the  general  rule  of  law.  there  is  no  dimculty.  One  partner  cannot  maintain  an  ac- 
tion for  a  balance  on  the  partnership  accounts  until  the  accounts  have  been  settled 
and  adjusted,  and  until  it  is  ascertained  what  is  the  balance  due  from  the  partner 
against  whom  the  claim  is  made;  but  there  may  be  special  bargains  by  which  par- 
ticular transactions  are  isolated  and  separated  from  the  winding  up  of  the  concern 


§    loO)  LOSSES    CAUSED    BY    PARTNER'S    WRONG.  323 

Where  one  partner  commits  a  distinct  tort  against  his  co-partner, 
in  no  way  connected  with  the  pai'tnership  business,  he  is  liable  in 
an  action  at  law  as  any  one  else  would  be."  Thus,  when  one  part- 
ner injures  the  separate  property  of  his  co-partner  used  in  the 
firm  business,  he  is  liable  in  an  action  at  law.^^  But  the  wrongful 
act  may  be  in  some  way  connected  with  the  partnership,  and  still 
it  may  create  an  individual  liability  to  his  co-partner,  enforceable 
at  law.  Thus,  fraud  in  inducing  another  to  enter  into  a  partnership 
is  actionable  at  law.^»  So,  where  a  partner,  in  fraud  of  his  co- 
partners, gives  a  note  in  the  name  of  the  firm  for  a  private  debt  of 
his  own,  he  is  liable  to  his  copartners  in  an  action  at  law  for  the 
amount  they  have  been  compelled  to  pay.''*  But,  if  the  note  should 
be  paid  out  of  firm  assets,  it  is  apprehended  that  an  action  at  law 
would  not  lie;   for,  until  an  accounting  Jind  settlement  of  the  part- 

and  are  taken  out  of  the  gene  al  law  of  partnersliip.  When  we  consider  the  cir- 
cumstances of  this  case,  plaiutiifs  right  of  action  may  be  put  upon  the  footing  of  ii 
separate  transaction."  Baylcy,  B.,  in  Jackson  v.  Stopherd,  2  Cromp.  &  M.  301,  8ti5. 
Partners  may  sepanite  any  portion  of  their  partnership  affairs  from  the  rest,  and 
submit  it  to  arbitrators  for  adjustment;  and.  if  a  sum  is  found  due  from  one  to 
the  other,  a  promise  to  pay  that  sum  is  binding,  and  an  action  may  be  sustained 
upon  it,  notwithstanding  the  other  partnership  concerns  remain  unsettled.  Gibson 
y.  Moore,  6  N.  II.  547.  When  a  firm  has  been  dissolved,  and  one  partner  has  as- 
sumed the  entire  control  of  the  goods,  an  action  may  be  brought  by  such  partner 
against  another  partner  to  whom  he  has  sold  a  portion  of  the  goods,  at  the  other's 
request,  and  on  a  promi.^o  to  pay  him.  and  not  the  firm.  Caswell  V.  Cooper,  18  III. 
.532.  An  action  ut  law  is  maintainable  by  one  partner  against  another  upon  a 
promissory  note  executed  by  the  one  to  the  other,  involving  particular  items  or 
transactions  of  the  partnership  business.  Wilson  v.  Wilson,  2t)  Or.  251,  ixS  Pac. 
185. 

7  1  Pierce  t,  Thompson,  ti  Pick.  (Mass.)  192;    Queen  v.  Mallinson,  1(1  Q.  B.  3(J7. 

T2  Haller  v.  WiUamowicz,  23  Ark.  bOH. 

T3  Boughnr.  v.  Black's  Adm'r.  83  Ky.  r)21:  Rice  ▼.  Culver,  32  N.  J.  Eq.  601; 
Morse  v.  t,  itchins,  102  Mass.  439;  Perry  v.  Hale.  143  Mass.  540,  10  N.  E.  174; 
More  V.  Band,  60  N.  Y.  208. 

T*  Calkins  v.  Smith.  48  N.  Y.  014.  usually  cited  in  support  of  this  proposition, 
is  not  an  action  against  a  partner  at  all.  All  it  really  decided  is  that  the  fraud 
is  not  upon  the  firm,  but  upon  the  innocent  partners,  and  that  the  cause  of  action 
arising  therefrom  is  no  part  of  the  partnership  assets.  It  does  not  decide  that 
one  partner  may  maintain  an  action  at  law  without  an  accounting,  where  the 
note  was  paid  out  of  partnership  assets.  See,  also.  T.  Pars.  Partn.  §  203;  Cros* 
T.  Cheshire,  7  Exch.  43;   Osborne  t.  Harper,  5  East,  225. 


324  AcrrioNS  between  partners.  (Ch.  7 

nership  affairs,  it  is  impossible  to  say  what,  if  anything,  the  plain- 
tiff has  suffered."  Non  constat  the  wrongdoing  partner  may  be 
found  entitled  to  the  whole  of  the  partnership  assets  upon  an  ac- 
counting. So,  also,  one  partner  cannot  maintain  an  action  at  law 
against  his  co-partner  for  neglect  of  the  partnership  business,  be- 
cause the  loss  is  suffered,  not  individually,  but  through  the  diminu- 
tion of  the  partnership  assets.  Until  a  settlement  of  the  partnership 
accounts,  the  damage  cannot  be  ascertained."  In  some  eases,  as 
has  been  seen,  a  partner  is  entitled  to  contribution  to  a  loss,  al- 
to Sweet  V.  Morrison,  103  N.  Y.  235,  240,  8  N.  E.  atKi,  was  an  action  by  one 
partner  against  his  co-partner  to  recover  damages  for  fraud  practiced  upon  him 
by  them  in  the  discharge  of  a  debt  due  the  partnership  from  a  third  person.  The 
court  held  that,  while  defendants  were  liable  for  damages  so  caused,  a  partnership 
settlement  was  necessary.  The  court  said:  "Sweet  may  recover,  not  the  debt 
due  to  the  firm,  for  that  is  discharged,  but  damages  for  the  fraud  practiced  upon 
him  In  the  process.  This  is  his  individual  right,  and  the  resultant  damages  can 
only  be  measured  by  his  individual  loss;  and  that  loss,  if  it  exists  at  all,  must 
necessarily  be,  and  can  only  be.  a  diminution  of  his  partnership  share,  protluced 
by  a  collusive  waste  of  partnership  assets.  But  he  has  not  proved  any  such  loss. 
It  cannot  be  known,  until  a  settlement  of  the  partnership  accounts,  what  loss  has 
resulted  from  the  fraud.  Payson,  Cauda  &  Co.  are  not  bound  to  pay  Sweet's  firm 
or  Sweet's  partners  anything.  Primarily,  the  action  is  by  Sweet  against  hla  co- 
partners for  a  partnership  settlement,  in  which  he  charges  tliom  with  the  willful 
and  fraudulent  waste  of  a  valuable  claim,  and  holds  the  debtors  responsible  also 
by  reason  of  their  collusive  participation.  That  is  the  sole  theory  upon  which 
the  action  can  be  maintained.  To  Sweet's  partners,  and  to  his  firm,  nothing  is 
due  from  Payson.  Cauda  &  Co.,  and  they  can  be  compelled  to  pay  only  what  is 
needed  to  perfect  Sweet's  rights,  as  disclosed  by  an  honest  settlement."  See,  also. 
Fuller  ▼.  Percival,  126  Mass,  381;  Emery  ▼•  Parrott.  107  Mass.  95;  Osborne  v. 
Iliiri)er.  5  East,  225.  As  to  rights  against  third  persons,  growing  out  of  a  partner's 
wrongdoing,  see  post,  p.  371. 

7  6  Capen  v.  Barrows.  1  Gray  (Mass.)  37G.  See.  also,  cases  cited  in  note  (58. 
supra.  That  one  partner  fraudulently  converts  to  his  own  use  property  supplied 
by  another  for  the  partnership  use  dissolves  the  partnership,  or,  at  least,  gives  the 
injured  party  a  legal  right  of  action.  Crosby  v.  McDermitt,  7  Cal.  14(j.  Where 
ane  partner  mixed  partnership  funds  with  his  own,  made  deposits  of  them  in  bank 
in  his  own  name,  appropriated  them  to  his  own  use,  assuming  the  absolute  and 
entire  control,  and  the  bank,  becoming  insolvent,  received  its  notes,  and  had  them 
registered  in  his  own  name,  without  the  consent  or  knowledge  of  his  co-partner, 
by  reason  whereof  the  partnership  funds  were  lost,  held,  that  such  partner  was 
responsible  to  the  co-partner  foi  his  share  of  the  fund,  and  must  bear  the  loss  alone. 
Lefever  t.  Underwood,  41  Pa.  St.  505. 


§    136)  EQUITABLE    ACTIONS    IN    GENERAL.  326 

though  caused  by  his  own  wrong.^^  In  such  a  case,  if  any  partner 
pays  more  than  his  share,  he,  nevertheless,  cannot  recover  it  in 
an  action  at  law  against  any  of  his  co-partners  J*  Obviously,  if  one 
partner  is  entitled  to  contribution  from  his  co-partners,  he  cannot 
be  regarded  as  a  wrongdoer  as  to  them.  Equally  obvious  is  it  that 
a  partnership  accounting  would  be  necessary  to  ascertain  whether 
any  partner  had,  in  fact,  paid  more  than  his  share,  and,  if  so,  how 
much. 

EQUITABLE  ACTIONS  IN  GENERAL— JURISDICTION. 

136.  The  jurisdiction  of  equity  over  partnership  affairs  is 
governed  by  ordinary  principles,  but,  ov.  :ng  to  the 
complex  nature  of  the  relation,  equity  lias  come  to 
be  the  chief  tribunal  for  the  settlement  of  partner- 
ship controversies. 

We  have  seen  in  what  cases  an  action  at  law  can  be  maintained 
between  partners.  It  may  be  stated  as  a  general  rule  that  in  all 
other  cases  equity  has  jurisdiction  to  grant  the  appropriate  relief. 
The  exercise  of  jurisdiction  is  governed  by  ordinary  principles.  Eq 
uity  will  not  interfere  where  there  is  a  plain  adequate  remedy  at 
law,  but  the  nature  of  a  partnership  is  such  that  the  questions  aris- 
ing between  partners  almost  always  fall  within  the  recognized  rules 
governing  the  jurisdiction  of  courts  of  equity.^' 
OeneraX  Rules  as  to  Interference  betioeen  Partners. 

There  are  three  general  rules  by  which  courts  of  equity  are  in- 
fluenced when  tlK'ir  interference  is  sought  by  one  partner  against 
another,  and  to  which  it  will  be  convenient  at  once  to  refer;  for 
the  same  rules  are  observed  in  all  actions  for  specific  performance, 
for  an  account,  for  a  receiver,  for  an  injunction,  and  in  those  actions 
for  fraud  in  which  equitable  relief,  as  distinguished  from  the  simple 
recovery  of  damages,  is  sought.     The  rules  in  question,  however, 

T7  Ante,  p.  175. 

T8  Story,  Partn.  §  220;    Pearson  v.  Skelton,  1  Mees.  &  W.  504. 

1*  Generally,  aa  to  jurisdiction  of  equity  over  partnerships,  see  Story,  Eq.  Jur. 
I  666;  Bisp.  Eq.  S  505;  Christy's  Appeal,  92  Pa.  St.  167;  Epping  t.  Aiken,  71 
Ga.  682;    Bracken  t.  Kennedy,  3  Scam.  (111.)  558. 


3:^6  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

have  no  application  to  cases  in  which  one  partner  may  sue  another 
at  law.  The  rules  alluded  to  are  (1)  not  to  interfere  except  with  a 
view  to  dissolve  the  partnership;  (2)  not  to  interfere  in  matters  of 
internal  regulation;  (3)  not  to  interfere  at  the  instance  of  persons 
who  have  been  guilty  of  laches. 

SAME— KECESSIT'X   OP   PRAYING  FOR  A  DISSOLUTION. 

137.  The  old  rule  not  to  interfere  except  with  a  viev7  to  a 
dissolution  has  been  much  relaxed,  but  not  to  the 
extent  of  requiring  equity  to  undertake  the  man- 
agement of  a  going  concern.*" 

Formerly,  courts  of  equity  were  averse  to  interfering  at  all  be 
tween  one  partner  and  another,  unless  it  was  for  the  purpose  of  dis 
solving  the  pailnership ;  or,  if  it  was  dissolved  already,  of  finally 
winding  up  its  affairs.  Hence  it  will  be  found,  on  reference  to  the 
older  reported  decisions,  that,  if  a  dissolution  was  not  sought,  the 
jourt  would  not  decree  a  partnership  account,  nor  restrain  a  partner 
from  infringing  the  partnership  articles,  nor  protect  the  partnership 
assets  from  destruction  or  waste.  This  rule,  at  no  time  perhaps  very 
nflexible,  has  gradually  been  relaxed;  it  having  been  discovered  to 
be  more  conducive  to  justice  to  interfere  to  prevent  some  definite 
wrong,  or  to  redress  some  particular  grievance,  than  to  decline  to  in- 
terfere at  all  unless  complete  justice  can  be  done  by  winding  up  the 
partnership,  and  in  that  manner  settling  all  disputes.  At  the  same 
time,  so  difficult  is  it  to  shake  off  old  associations,  and  to  run  coun- 
ter to  established  rules,  that  traces  of  the  aversion  alluded  to  may 
yet  be  found  in  the  decisions  of  the  courts,  and  especially  in  thovse 
which  relate  to  the  specific  performance  of  agreements  to  form  part- 
nerships, and  in  those  which  relate  to  the  appointment  of  receivers 
and  managers.  Indeed,  notwithstanding  the  extent  to  which  the 
rule  has  been  relaxed  in  actions  for  an  account,  or  for  an  injunction, 
one  of  the  first  points  for  consideration,  even  now,  when  one  partner 
sues  another  for  equitable  relief,  is,  can  relief  be  had  without  dis- 

8  0  The  text  of  this  and  the  two  following  section*  is  substantially  that  of  Mr. 
Lindley.     See  Lindl.  Partn.  pp.  465-^7a. 


§    138)       NONINTERFERENCE  IN  MATTER  OF  INTERNAL  REGULATION.  327 

solring  the  partnership?     Undoubtedly,  it  may,  much  more  certain- 
ly than  formerly,  but  not  always  when  perhaps  it  ought. 

Modem  Rvle. 

Without  stopping  to  inquire  how  the  question  is  to  be  answered 
in  any  particular  case,  it  may  be  stated  as  a  general  proposition 
that  courts  will  not,  if  they  can  avoid  it,  allow  a  partner  to  derive 
advantage  from  his  own  misconduct  by  comi)elling  his  co-partner  to 
submit  either  to  continued  wrong  or  to  a  dissolution;**  and  that, 
rather  than  permit  an  improper  advantage  to  be  taken  of  a  rule  de- 
signed to  operate  for  the  benefit  of  all  parties,  courts  will  interfere 
in  modem  times  where  formerly  they  would  have  declined  to  do  so.®^ 
At  the  same  time,  courts  will  not  take  the  management  of  a  going 
concern  into  their  own  hands,  and.  if  they  cannot  usefully  interfere 
in  any  other  manner,  they  will  not  Interfere  at  all,  unless  for  the 
purpose  of  winding  up  the  partnership. 

SAME— NONINTERFERENCE  IN  MATTER  OF  INTERNAL 
REGULATION. 

138.  A   court  of  equity  will  not  interfere  in   a  matter  of 
merely  internal  regulation. 

A  court  of  justice  will  not  interfere  between  partners  merely  be- 
cause they  do  not  ugree.*'  It  is  no  part  of  the  duty  of  the  court  to 
settle  all  partnership  squabbles;  it  expects  from  every  partner  a 
certain  amount  of  forbearance  and  good  feeling  towards  his  copart- 
ner; and  it  does  not  regard  mere  passing  improprieties,  arising  from 
infii-mities  of  temper,  as  sufficient  to  warrant  a  decree  for  dissolu- 
tion, or  an  order  fO'r  an  injunction,  or  a  receiver.®*  And,  when  part- 
ners have  themselves  agreed  that  the  management  of  their  affairs 
shall  be  intrusted  to  one  or  more  of  them  exclusively,  the  court  will 
not  remove  the  managers,  or  interfere  with  them,  unless  they  are 

81  See  Fairthorne  v,  Weston,  3  Hare,  387,  392. 

81  See  Davis  v.  Davis,  60  Miss.  615;   Traphagen  v.  Burt,  67  N.  Y.  30. 

8  8  But  see  Davis  v.  Davis,  60  Miss.  615;    Pirtle  v.  Penn,  3  Dana  (Ky.)  247. 

8  4  See  Marshall  v.  Colman,  2  Jac.  &  W.  266;  Anderson  v.  Anderson,  25  Beav. 
190;  Smith  v.  Jeyes,  4  Beav.  503;  Cofton  v.  Horner,  5  Price,  537.  See,  also, 
post,  p.  405. 


328  ACTIONS    BETWEEN    PARTNERS.  (Ch.  7 

clearly  acting  illegally,  or  in  breach  of  the  trust  reposed  In  them.'" 
The  rule  not  to  interfere  in  matters  of  merely  internal  regulation  or 
discipline  is  strongly  exemplified  in  cases  of  clubs.** 


SAME— EFFECT  OF   LACHES. 

139.  Equity  will  not  interfere  at  the  instance  of  persons 
•who  have  been  guilty  of  laches. 

Laches  a  Bar  to  Relief  in  Equity. 

Independently  of  the  statute  of  limitation,  a  plaintiff  may  be 
precluded  by  his  own  laches  from  obtaining  equitable  relief.  Laches 
presupposes  not  only  lapse  of  time,  but  also  the  existence  of  cir- 
cumstances which  render  nejiligence  imputable;  and,  unless  reason- 
able vigilance  is  shown  in  the  prosecution  of  a  claim  to  equitable 
relief,  the  court,  acting  on  the  maxim,  "Vigilantibus  non  dormien- 
tibus  subveniunt  leges,"  will  decline  to  interfere." 

To  a  Suit  for  an  Account. 

In  the  early  case  of  Sherman  v.  Slierman,"  two  persons  had  deal- 
ings as  merchants.  One  of  them  died.  His  widow  filed  a  bill  for 
an  account,  but,  although  the  statute  of  limitations  did  not  apply, 
the  bill  was  dismissed,  on  the  ground  that  many  years  had  elapsed 
since  the  dealings  in  question  had  taken  place,  and  the  deceased 
had  allowed  any  claims  he  might  have  had  to  slumber."* 

Acquiescence  in  Account. 

Again,  where  an  account  has  been  rendered,  and  has  been  long 
acquiesced  in,  unless  fraud  be  proved,  a  court  will  not  reopen  it, 
although  the  account  may  be  shown  to  be  erroneous,  and  although 

8  6  See  Lawson  v.  Morgan,  1  Price,  303;    Waters  v.  Taylor,  15  Ves.  10. 

8a  See  Foss  v.  Harbottle,  2  Hare,  461;  Gormon  v.  Russell,  14  Gal.  531;  Burke 
T.  Roper,  79  Ala.  138;  Mozley  v.  Alston,  1  Phil.  Ch.  790;  Carlen  v.  Drury,  1  Ves. 
&  B.  154. 

8T  Evans  v.  Smallcombe,  L.  R.  3  H.  L.  249,  256;  Groenendyke  T.  Coffeen,  109 
111.  325;  Drew  v.  Beard,  107  Mass.  64;  Stout  v.  Seabrook's  Ex'rs,  30  N.  J.  Eq.  187; 
Richards  v.  Todd,  127  Mass.  167;  Hoyt  v.  Sprague,  103  U.  S.  613;  Pond  t.  Clark, 
24  Conn.  370. 

88  2  Vem.  276. 

•»  See,  also,  Start  t.  MeUish,  2  Atk.  6ia 


§    139)  EFFECT    OF    LACHES.  329 

no  final  settlement  was  ever  come  to.*"  The  same  principle  is  acted 
on  in  tali^ing  accounts;  for  charges  long  improperly  made  and  ac- 
quiesced in,  or  long  omitted  to  be  made,  and  known  so  to  be,  are 
regarded,  in  the  absence  of  fraud,  as  having  been  made  or  omitted 
by  agreement,  and  the  question  of  mistake  will  not  be  gone  into.^^ 
Laches  in  Enforcing  Agreements  for  Partnei'ships. 

The  doctrine  of  laches  is  of  great  importance  where  persons  have 
agreed  to  become  partners,  and  one  of  them  has  unfairly  left  the 
other  to  do  all  the  work,  and  then,  there  being  a  profit,  comes  for- 
ward, and  claims  a  share  of  it.  In  such  cases  as  these,  the  plain- 
tiff's conduct  lays  him  open  to  the  remark  that  nothing  would  have 
been  heard  of  him  had  the  joint  adventure  ended  in  loss  instead 
of  gain;  and  a  court  will  not  aid  those  who  can  be  shown  to  have 
remained  quiet  in  the  hope  of  being  able  to  evade  responsibility 
in  case  of  loss,  but  of  being  able  to  claim  a  share  of  gain  in  case 
of  ultimate  success.  Thus,  in  Cowell  v.  Watts"-  the  plaintilf  aiul 
the  defendant  had  agreed  to  take  land  for  the  purpose  of  improv 
ing  it,  and  letting  it  upon  building  leases.  A  long  lease  was  ac- 
cordingly obtained,  and  was  taken  in  the  name  of  the  defendant. 
The  plaintiff  then  applied  to  the  defendant  to  enter  into  a  written 
agreement  upon  the  subject  of  their  joint  adventure,  but  this  the 
defendant  declined.  The  defendant  also  assumed  to  act  as  sole 
owner  of  the  land  obtained.  He  removed  the  plaintiff's  cattle  from 
it,  and  borrowed  money  on  a  mortgage  of  the  land,  and  expended 
such  money  in  building  upon  it.  The  plaintiff  all  this  time  did 
nothing,  although  he  was  aware  of  what  was  going  on.  After  a 
lapse  of  eighteen  months,  the  plaintiff,  by  his  solicitor,  called  upon 
the  defendant  to  perform  the  original  agreement;  and,  the  defend- 
ant declining,  a  suit  for  specific  performance  was  instituted.  The 
bill,  however,  was  dismissed,  with  costs,  on  the  ground  that  the 
plaintiff  had,  by  his  conduct,  induced  the  defendant  to  suppose  that 
the  plaintiff  had  abandoned  the  speculation,  and  that  the  defend- 
ant had  the  sole  right  to  the  land. 

90  Scott  V.  Milne,  5  Beav.  215;  s.  c,  on  appeal,  7  Jur.  709;  Bell  v.  Hudson,  73 
Cal.  285, 14  Pac.  791;  Hite's  Heirs  v.  Hite's  Ex'rs,  1  B,  Mon.  (Ky.)  177;  Coleman 
T.  Marble,  9  La.  Ann.  476. 

•1  Thornton  v.  Proctor,  1  Anst  94.  »2  2  Hall  &  T.  224. 


330  ACTIONS    BETWEEN    PARTNEBS.  (Ch.  7 

Laches  where  Pa/rtnership  is  a  Mining  Partnership. 

The  doctrine  now  under  discussion  is  especially  applicable  to 
mining  and  other  partnerships  of  a  highly  speculative  character. 
Mining  operations  are  so  extremely  doubtful  as  to  their  ultimate 
success  that  it  is  of  the  highest  importance  that  those  engaged  in 
them  should  know  on  whom  they  can  confidently  rely  for  aid.  If, 
therefore,  a  person  engages  in  a  mining  adventure  in  partnership 
with  others,  and  disputes  arise  between  them,  and  he  is  denied  a 
partner's  rights,  be  should  be  careful  to  assert  his  claims  whilst 
the  dispute  is  fresh;  for  if  he  lies  by  until  the  mine  has  been  ren- 
dered prosperous  by  his  co-partners,  and  he  then  comes  forward, 
insisting  on  his  rights  as  a  partner,  and  seeks  equitable,  as  dis- 
tinguished from  legal,  relief,  he  will  be  refused  it,  on  the  ground 
that  he  has  applied  for  it  too  late."  On  this  principle,  in  Senhonso 
V.  Christian,"*  where  several  persons  were  lessees  of  a  colliery,  and, 
the  lease  being  about  to  ex^tire,  one  of  them  obtained  a  renewal  of 
it  in  liis  own  iianu'.  Lind  Kossl.vn  di.sniissed.  willi  costs,  a  bill  filed 
by  the  others,  claiming  the  benefit  of  the  renewed  lease.  The  plain- 
tiffs had  allowed  the  defendant  to  work  the  colliery  single-handed, 
at  a  great  expense:  and,  although  they  were  aware  of  all  the 
facts  when  the  original  lease  expired,  they  did  not  take  any  pro- 
ceedings to  enforce  their  rights  until  four  years  afterwards.  This 
case  was  referred  to  with  approbation  by  Lord  Eldon.  in  the  case 
of  Norway  v.  Rowe.®°  in  which  he  refused  a  motion  for  a  receiver 
made  on  behalf  of  a  person  claiming  to  be  a  partner,  but  whose  rights 
had  been  long  denied.  Again,  in  Prendergast  v.  Turton,"  where 
the  capital  subscribed  for  working  a  mine  was  spent,  and  the  plain- 
tiffs refused  to  contribute  more,  but  the  other  partners  did  con- 
tribute more,  and  ultimately,  after  a  lapse  of  some  years,  succeeded 
in  making  the  mine  profitable,  and  then  the  plaintiffs  came  for- 
ward, claiming  their  shares  in  the  concern,  their  bill  was  dismissed 
by    V^ice   Chancellor   Knight-Bruce,   and   his   decision    was  affirmed 

»s  See,  in  addition  to  cases  cited  below,  Allowaj  t.  Braine,  2(5  Beav.  575;    VVallier 
V.  Jeffreys,  1  Hare,  341. 
»*  19  Beav.  35(i,  note,  also  cited  in  Norway  v.  Rowe,  19  Ves.  157. 
•  8  19  Ves.  144. 
»•  1  Youuge  &  C.  Ch.  98;   a.  c,  on  appeal,  13  Law  J.  Ch.  2G8. 


§    139)  EFFECT    OF    LACHES.  331 

on  appeal.  The  same  doctrine  was  applied  in  Clegg  v.  Edmondson,*^ 
the  facts  of  which  were  similar  to  those  of  Senhouse  v.  Christian, 
already  refen-ed  to.  In  two  respects,  Clegg  v.  Edmondson  goes  fur- 
ther than  the  other  cases;  for.  first,  the  defendants  had  bronght 
in  no  fresh  capital,  the  mine  having  paid  its  own  expenses;  and  sec- 
ondly, although  the  plaintiffs  had  not  asserted  their  claims  by  legal 
proceedings,  they  had  constantly  insisted  on  their  right  to  par- 
ticipate in  the  profits  obtained  by  the  defendants  under  the  renewed 
lease.  Ujon  this  ])oint.  however,  it  was  observed  by  Lord  Jus 
tice  Turner  that  he  could  not  agree  to  a  doctrine  so  dangerous  as 
that  a  mere  assertion  of  a  claim,  unaccompanied  by  any  act  to 
give  effect  to  it,  can  avail  to  keep  alive  a  right  which  would  other- 
wise be  precluded."'  In  Rule  v.  Jewell  "  a  member  of  a  cost-book 
mining  company,  which  was  seriously  in  debt,  had  his  shares  for- 
feited for  noui)ayment  of  calls.  After  five  years,  he  disputed  the 
validity  of  the  forfeiture,  and  claimed  to  be  reinstated  as  a  part- 
ner. But  it  was  held  that  he  was  precluded  by  his  own  laches  from 
obtaining  relief. 
L^'ect  of  Evidence  of  Ahandonment. 

In  the  cases  already  referred  to,  it  will  be  observed  that  there  was 
no  positive  evidence  that  the  plaintiff  had  ever  abandoned  his 
rights;  ^""^  and  in  Clegg  v,  Edmondson  there  was  evidence  to  show 
that  no  abandonment  had  ever  been  contemplated.  It  need,  how- 
ever, scarcely  be  observed  that  positive  evidence  of  abandonment, 
in  addition  to  the  negative  evidence  derived  from  mere  lapse  of 
liiiif.  (luiing  which  nothing  had  been  done  by  the  j)lain(itr,  t^i-eallv 
improves  the  position  of  his  opponent.  There  are  several  cases  il- 
lustrating this.     In  Finckle  v.  Stacy,^°*  two  artificers  agreed  to  do 

97  8  De  Gex,  M.  &  G.  787. 

•  »  "This  general  proposition  must,  of  course,  be  taken  with  reference  to  the 
case  before  the  court.  It  cannot  be  laid  down  as  universally  true  that  protests 
are  useless.  They  exclude  inferences  which  in  their  absence  might  fairly  be 
drawn  from  the  conduct  of  the  party  protesting,  and  are  conclusive  to  show  that 
no  abandonment  of  right  was  intended."      Lindl.  Partn.  p.  470,  note    b. 

»»  18  Ch.  Div.  GtJO. 

100  In  Prendergast  v.  Turton,  supra,  perhaps  there  was,  and  it  is  on  the  ground 
that  there  was  that  Lord  Chelmsford  distinguished  that  case  from  Chirke  r.  Llart, 
6  H.  L.  Cas.  633,  affirming  6  De  Gex,  M.  &  G.  232. 

101  Macn.  Sel    Cas.  9. 


332  ACTIONS    BETWEEN    PART.\EK3.  (Ch.    7 

work  for  their  joint  benefit.  After  the  work  was  done,  the  person 
for  whom  it  was  done  refused  to  pay.  The  defendant  requested  the 
plaintiff  to  join  in  legal  proceedings  to  compel  payment,  but  the 
plaintiff  declined.  Thereupon  the  defendant  brought  an  action  for 
payment  of  the  work  done  by  him,  and  obtained  a  verdict.  The 
plaintiff  then  claimed  half  the  amount  recovered,  but  the  court 
held  that  he  was  not  entitled  to  any  share  of  it.  So,  if  a  part-owner 
of  a  ship  disapproves  of  a  proposed  voyage,  and  arrests  the  ship 
until  the  other  part  owners  give  him  security  for  his  share,  he  is 
not  entitled  to  any  portion  of  the  profits  arising  from  such  voy- 
age.^*""  A  fortiori,  if  a  partner  formally  withdraws  from  an  ad- 
venture when  its  prospects  are  bad,  will  he  be  unable  to  claim  a 
share  of  the  profits  resulting  from  it  if  it  ultimately  proves  to  be 
prntitnblc.'" '  Such  <-;ist's.  however,  are  not  so  much  cases  of  laches 
as  of  estoppel  or  agreements  to  release. 


ACCOUNTING  AND  DISSOLUTION. 

140.  Equity  has  jurisdiction  of  an  action  for  the  dissolu- 
tion of  a  partnership  and  an  accounting. 

Dissolution. 

The  remedy  of  a  partner  who  insists  upon  a  dissolution,  which 
is  opposed  by  his  co-partners,  is  by  a  suit  in  equity  for  a  dissolu- 
tion and  an  accounting.^''*  An  injunction  and  a  receiver  to  restrain 
the  defendants  from  dealing  with  the  partnership  assets,  and  from 
issuing  bills  or  notes  in  the  name  of  the  firm,  may  be  sought  and 
granted  in  the  same  action.  The  action  lies,  although  the  part- 
nership be  a  partnership  at  will,  and  can  therefore  be  dissolved 

102  Davis  V.  Johnston,  4  Sim.  539. 

108  M'Lure  v.  Ripley,  2  Macn.  &  G.  274. 

104  Lindl.  Partu.  492.  Equity  has  jurisdiction  to  settle  np  the  affairs  of  the 
partnership,  and  make  whatever  orders  are  necessary  to  do  complete  justice.  Story, 
Partn.  §  222;  Denver  v.  Roane,  99  U.  S.  355;  Ambler  v.  Whipple,  20  Wall.  546; 
Clagett  V.  Kilbourne,  1  Black,  346;  Sharp  v.  Hibbins,  42  N.  J.  Eq.  543,  9  Atl. 
113;  Harvey  v.  Varney,  98  Mass.  118;  Miller  v.  Lord,  11  Pick.  (Mass.)  11; 
Brackea  t.  Kennedy,  4  111.  558;    Clark  v.  Gridley,  41  Cal.  119. 


§    140)  ACCOUNTING    AND    DISSOLUTION.  333 

by  the  plaintiff  himself;"'  and,  if  the  partnership  has  been  dis- 
solved before  the  action  is  brought,  the  plaintiff  is  entitled  to  a 
declaration  to  that  effect.^°»  If  the  partnership  is  admitted,  and 
the  right  to  dissolve  is  not  contested,  the  court  will  decree  a  dis- 
solution on  motion,  before  the  hearing  or  trial."^  An  action  may 
be  brought  for  the  rescission  of  a  contract  of  partnership,  or  in 
the  alternative,  for  dissolution  of  the  partnership.^"*  The  grounds 
on  which  the  court  will  dissolve  a  partnership  will  be  considered 
hereafter  in  the  chapter  on  "Dissolution."  "•  In  the  present  chapter 
it  is  proposed  to  consider  the  subjects  of  account,  injunctions,  and 
receivers. 
Acccdiittuy. 

One  of  the  most  ancient  common-law  actions  was  the  action  of 
account.  It  could,  however,  be  brought  only  in  a  limited  class  of 
cases.  The  proceeding  under  it  was  cumbersome  in  the  extreme, 
and  courts  of  common  law  could  not  compel  a  discovery  from  the 
parties,  who  were  incompetent  to  testify.  It  is  not  surprising,  there- 
fore, that  the  common-law  action  of  account  should  have  fallen  into 
disuse.  It  was  to  some  extent  supplanted  at  law  by  the  action  of 
assumpsit.  The  equitable  procedure,  however,  was  greatly  superior 
to  that  of  the  common-law  tribunals,  whatever  form  of  action  might 
be  adopted.  A  master  in  chancery  had  abundant  power  to  examine 
the  parties  on  oath,  to  make  inquiries  from  all  proper  persons  by 
testimony  on  oath,  and  to  require  the  production  of  all  necessary 
documents.""  Equity  has  plenary  jurisdiction  in  the  matter  of  a 
partnership  accounting.  It  extends  to  all  matters  necessary  to 
wind  up  the  partnership  affairs,  including  the  sale  of  real  estate.*" 

106  Liudl.  Partn.  p.  491;    Master  v.  Kirton,  3  Ves.  7^ 

106  Lindl.  Partn.  p.  492. 

107  Thorp  v.  Holdsworth,  3  Ch.  Div.  637. 

108  Bagot  V.  Easton,  7  Ch.  DIt.  1. 
108  Post,  p.  393. 

110  Fetter,  Eq.  p.  248. 

111  Bates,  Partn,  907;  Denver  ▼.  Roane,  99  U.  S.  355;  Clark  t.  Gridley,  41 
Oal.  119;  Bracken  t,  Kennedy,  3  Scam.  (111.)  558;  Gillett  t.  Hall,  13  Conn.  426; 
Niles  T.  Williams.  24  Conn.  279;  Bennett  v.  Woolfolk,  15  Ga.  213.  As  to  the 
common-law  action  account,  see  Lee  v.  Abrams,  12  111.  Ill;  Bracken  v.  Kennedy, 
3  Scam.  (lH)  5."8;  Hunt  v.  Gorden,  52  Miss.  195;  Stuart  t.  Kerr,  Morris  (Iowa) 
240;    Neal  t.  Keel's  Ei'rs,  4  T.  B.  Mon.  (Kj.)  162;    Wilhelm  t.  Caylor,  32  Md. 


334  ACTI0N3    BETWEEN    PARTNERS.  (Ch. 


SAME— RIGHT  TO  ACCOUNTING. 

141.  Every  partner  is  entitled  to   an  account  from  his  co- 

partners. 

142.  ACCOUNTING    UPON    DISSOLUTION  —  A    partner 

may  maintain  a  bill  for  an  accounting  w^here  there 
has  either  been  a  dissolution,  or  he  has  grounds  to 
seek  one. 

It  has  been  seen  that  the  rule  of  equity  not  to  interfere  in  part- 
nership affairs  except  with  a  view  to  a  dissolution  has  been  re- 
laxed. The  application  of  this  rule  to  actions  for  an  accounting 
will  be  presently  examined,  but  in  cases  where  there  has  been  a 
dissolution,  or  where  grounds  for  a  dissolution  exist,  and  one  is 
sought  by  the  bill,  the  right  of  a  partner  to  maintain  the  bill  is 
undoubted. ^^^ 

lol;  AiJi>k'ljy  v.  Brown,  24  N.  Y.  143;  Rickey  v.  Bowue,  18  Johns.  (N.  Y.)  131; 
Griffith  V.  Willing,  3  Bin.  (Pa.)  317;  Spear  v.  Newell,  2  Paine,  li(J7,  Fed.  Gas. 
No.  13,224.      (Jeucrally  as  to  partnershii)  accounting,  see  Lilliendahl   v.  Stegmair. 

45  N.  J.  Eq.  G48,  18  Atl.  21G;  Niles  v.  Williams,  24  Conn.  27!);  Gillett  t.  Hall, 
13  Conn.  42G;  Cox  v.  Volkert,  8C  Mo.  505.  The  fact  that  the  prayer  of  the  com- 
plaint, in  a  suit  to  dissolve  a  partnership,  asked  damages,  as  well  as  an  accounting 
and  a  receiver,  does  not  make  the  action  one  at  law.  Adams  v.  Shewaltor,  139 
Ind.  178,  3S  N.  E.  007.  In  an  action  for  an  accounting  between  partners  on  a 
dissolution,  the  court  will  be  governed,  so  far  as  it  is  reasonable,  by  the  articles 
of  agreement  between  the  parties,  Leighton  v.  Clarke,  42  Neb.  427,  GO  N.  W. 
87f).  In  a  suit  for  the  dissolution  and  settlement  of  a  partnership,  a  personal 
judgment  should  not  be  rendered  against  one  partner  for  the  amount  supposed  to 
be  due  to  the  other  as  his  share  of  the  profits  until  the  assets  are  reduced  to  cash 
and  the  debts  paid,  there  being  no  agreement  to  the  contrary.  Green  ▼.  Stacy, 
90  Wis.  46,  62  N.  W.  627. 

112  Persons  claiming  under  a  partner  may  sometimes  maintain  an  action  foi 
on  accounting.  Thus,  personal  representatives  of  a  deceased  partner  may  do  so. 
Ilackwell  v.  Eustman,  Cro.  Jac.  410;  Heyne  v.  Middlemore,  1  Rep.  Ch.  138; 
Miller  v.  .Tones.  3!)  111.  rA;  Jennings'  Adm'rs  v.  Chandler,  10  Wis.  21;  Freeman 
V.  Freeman,  136  Mass.  260;    Grim's  Appeal,  105  Pa.  St.  375;    Costley  v.  Towles, 

46  Ala.  660;  Denver  t.  Roane,  99  U.  S.  355.  Cf.  Griffith  t.  Vanheythuysen,  9 
Hare,  85;  Hutton  v.  Laws,  55  Iowa,  710,  8  N.  W.  642;  State  v.  Brower,  93  N. 
C.  344;  Newell  v.  Humphrey.  37  Vt.  2G5.  Widow  and  heirs  cannot,  their  remedy 
being  to  compel  the  representative  to  act  or  account.      Hutton  v.  Laws,  .5.'^.  Iowa, 


§    142)  ACCOUNTING    UPON    DISSOLUTION.  336 

The  right  of  every  partner  to  have  an  account  from  his  co-part- 
ners of  their  dealings  and  transactions  is  too  obvious  to  require  com 
ment.     An  action  for  an  account  may  be  maintained  by  partners, 

710,  8  N.  W.  G42;  Harrison  v.  Rigbter,  11  N.  J.  Eq.  389;  Tate  v.  Tate,  35  Ark. 
289;  Rosenzweig  v.  Thompson,  66  Md.  593,  8  Atl.  659;  Ludlow  v.  Cooper,  4  Ohio 
St.  1.  For  exceptions  to  this  doctrine,  see  Bates,  Partn.  §  925.  The  assignee  of 
a  partner's  interest  may  maintain  the  bill.  Strong  v.  Clawson,  10  111.  346;  Miller 
V.  Brigham,  50  Cal.  615;  Donaldson  v.  Bank,  1  Dev.  Eq.  (N.  C.)  103;  Farley  v. 
Moog,  79  Ala.  148;  Bank  v.  Carrollton  Railroad,  11  Wall.  624;  Mathewson  v. 
Clarke,  6  How.  122.  See,  generally,  Bates,  Partn.  §  927.  A  purchaser  of  a 
partner's  share  on  execution  is  entitled  to  an  account  from  the  solvent  partners, 
as  is  also  the  execution  debtor  himself.  Lindl.  Partn.  p.  493;  Habershon  v. 
Blurton,  1  De  Gex  &  S.  121;  Perens  v.  Johnson,  3  Smale  &  G.  419;  Button  v. 
Morrison,  17  Ves.  193,  196;  Newhall  v.  Buckingham,  14  111.  405;  larley  t.  Moog, 
79  Ala.  148;  Hubbard  v.  Curtis,  8  Iowa,  1;  Barrett  v.  McKenzie,  24  Minn.  20; 
Clement  v.  Foster,  3  Ired.  Eq.  (N.  C.)  213;  Kuerr  v.  Hoffman,  65  i'a.  St.  126.  A 
creditor  at  large  of  the  firm  has  no  right  to  an  accounting.  Clement  v.  Foster,  3 
Ired.  Eq.  (N.  C.)  213;  Greenwood  v.  Brodbead,  8  Barb.  (N.  Y.)  593;  Young  t. 
Frier,  9  N.  J.  Eq.  465;  Mittnight  v  Smith,  17  N.  J.  Eq.  259;  Freeman  v.  Stewart. 
41  Miss.  138;  Reese  v.  Bradford,  13  Ala.  837.  Some  courts  have  held  surviving 
\iartners  as  trustees,  and  allowed  the  creditor  to  maintain  a  bill  to  wind  up  the 
partnership,  and  the  same  reasoning  has  been  applied  in  cases  of  insolvency. 
Bates,  Partn.  §  929,  cases  cited.  See.  also,  Davis  v.  Grove,  2  Kob.  (N.  Y.)  134. 
1335;  Sanderson  v.  Stockdale,  11  Md.  5(S;  Bardwell  v.  Perry,  19  Vt.  292,  302, 
303;  Fiske  v.  Gould,  12  Fed.  372;  Johnston  v.  Straus,  26  P^ed.  57;  Fitzpatrick 
V.  Flauuagan,  106  U.  S.  018,  056,  1  Sup.  Ct.  369.  Creditors  of  deceased  partner, 
like  the  widow  and  heirs,  must  enforce  their  rights  through  a  personal  representii- 
tive.  Lindl.  Partn.  p.  494.  A  subpartner  has  no  right  to  an  accounting  from 
the  principal  firm  or  any  of  the  members  of  it  except  the  one  with  whom  he  is  a 
subpartner.  for  there  is  no  contract  or  privity  except  between  those  two.  Lindl. 
I'artn.  p.  493;  Burnett  v,  Snyder,  81  N.  Y.  550;  Shearer  v.  Paine,  12  Allen  (Mass.) 
289;  Reilly  v.  Reilly,  14  Mo.  App  62;  Bates,  Partn.  §§  1(>3,  928.  An  employ6 
compensated  by  a  share  of  the  profits  may  maintain  a  bill  for  an  accounting.  Bent- 
ley  T.  Harris.  10  R.  I.  434;  Hallett  v.  Cumston,  110  Mass.  32;  Channon  v. 
Stewart,  103  111.  541;  Harrington  v.  Churchward,  6  Jur.  (N.  S.)  576;  Rishton 
V.  Grissell,  5  Eq.  Cas.  326;  Lindl.  Partn.  p.  493.  See,  generally.  Freeman  v. 
Freeman,  136  Mass.  260;  Gerard  v.  Bates,  124  111.  150,  16  N.  E.  258.  The  fact 
that  defendant  in  an  action  for  an  accounting  denied  his  partnership  with  com- 
plainants did  not  deprive  him  of  the  right  to  a  just  statement  of  the  account  on 
his  being  found  to  be  a  partner.  Thompson  v.  Noble  (Mich.)  65  N.  W.  563. 
Where,  after  dissolution  of  a  partnership,  all  the  assets  are  left  in  the  hands  of 
one  partner  to  settle  the  partnership  affairs,  the  co-partner  is  entitled  to  an  account- 
ing, although  the  evidence  shows  the  defendant  has  paid  out  more  in  satisfaction 


^36  ACTIONS    BETWEEN    PABTNERS.  (Ch.   7 

although  the  partnership  accounts  are  not  complicated,***  and  al- 
though an  action  for  damages  may  be  sustainable/^*  and  although 
the  defendant  may  have  stolen  or  embezzled  the  money  of  the 
firm.**'     Moreover,  although  formerly  the  court  of  chancery  would 

of  firm  debts  than  he  has  received  from  the  assets.  Sharp  t.  Hibbins,  42  N.  J. 
Eq.  543,  9  Atl.  113.  Where  an  employ^  of  a  firm  receives  a  portion  of  the  net 
profits  of  a  branch  of  the  business  as  part  compensation  for  his  services,  equity 
will  have  jurisdiction  of  a  bill  by  his  employs  for  an  account  of  the  partnership 
affairs  for  the  purpose  of  ascertaining  the  profits  of  such  business,  although  the 
complainant  is  not  a  partner.  Channon  v.  Stewart,  103  111.  541.  See,  also,  Har- 
grave  v,  Conroy,  19  N.  J.  Eq.  281;  Hallett  v.  Cumston,  110  Mass.  32;  Clark  v. 
Gridley,  41  Cal.  119.  The  statute  of  limitations  applies  to  actions  of  account 
between  partners.  The  statute  does  not  begin  to  run  against  each  item  of  an 
account  between  partners  from  the  time  it  becomes  a  part  of  the  account,  but, 
if  part  be  within  six  years,  it  draws  that  which  is  before  after  it.  Todd  v. 
RalTerty's  Adm'rs,  30  N.  J.  Eq.  254.  A  cause  of  action  for  an  accounting  of 
the  affairs  of  a  partnership  does  not  necessarily  accrue,  for  the  purpose  of  setting 
the  statute  of  limitations  in  motion,  at  the  exact  date  of  the  dissolution  of  the 
partnership,  by  death  or  otherwise;  but  a  court  of  equity  may  postpone  the  period, 
if  the  survivor,  of  necessity  or  by  consent,  continues  in  control  of  the  property 
until  the  purpose  of  such  control  is  accomplished,  or  the  survivor  has  openly 
asserted  an  adverse  claim.  Thomas  v.  Hurst,  73  Fed.  372.  Where  a  co-part- 
nership has  ceased  to  do  business  more  than  six  years,  the  right  to  have  an  account 
and  settlement  is  barred  by  limitations.  Stovall  v.  Clay  (Ala.)  20  South.  387. 
See  ante,  p.  328.  In  an  action  for  a  partnership  accounting,  equity  will  refuse 
to  interfere  on  the  ground  that  the  claim  is  stale  where  plaintiff  has  allowed  25 
years  to  elapse  before  attempting  to  enforce  his  rights,  during  all  of  which  time 
he  had  knowledge  of  all  the  facts,  and  there  was  no  impediment  to  the  prosecution 
of  his  claim,  and  plaintiff  has  made  no  demand  upon  defendant,  nor  in  any  way 
asserted  his  claim.  The  objection  may  be  raised  by  demurrer,  on  the  ground 
that  the  complaint  does  not  state  facts  sulBcient  to  constitute  a  cause  of  action. 
Bell  T.  Hudson,  73  Cal.  285,  14  Pac.  791,  and  see  elaborate  note  to  this  case  in 
2  Am.  St.  Rep.  795.  An  accounting  may  be  had  of  the  affairs  of  an  illegal  part- 
nership where  it  is  completed.  Brooks  v.  Martin,  2  Wall.  70;  Harvey  v.  Vamey, 
98  Mass.  118;  Bfeuffer  v.  Maltby,  54  Tex.  454.  The  complaint  in  an  action  for 
an  accoimting  need  not  specify  the  particular  transactions  as  to  which  the  account- 
ing will  be  required.  Teschmacher  v.  Lenz,  82  Hun,  594,  31  N.  Y.  Supp.  543. 
On  a  bill  for  an  accounting  between  partners,  the  burden  of  proof  is  on  plaintiff 
to  establish  the  partnership,  and  to  show  by  the  accounts  that  a  true  balance  can 
be  stated.      Hmkson  v.  Ervin.  40  W.  Va.  Ill,  20  S.  E.  849. 

118  Cruikshank  v.  M' Vicar,  8  Beav.  106. 

ii4  Wright  V.  Hunter,  6  Ves.  792;  Blain  t.  Agar,  1  Sim.  37,  2  Sim.  289; 
Townsend  v.  Ash,  3  Atk.  336. 

116  Roope  T.  D'Avigdor,  10  Q.  B.  Div.  412. 


§    J  43)  ACCOUNTINO   WITHOUT    DISSOLUTION.  337 

not  entertain  a  suit  for  damages  merely,  although  the  suit  was  in 
form  a  suit  for  an  account,***  yet,  in  a  partnership  suit  Involving 
a  general  account,  claims  were  adjusted  which  in  ordinary  cases 
would  have  formed  the  subject  of  an  action  at  law;**^  and  it  is 
apprehended  that  now  the  court  will,  in  taking  such  an  account, 
deal  with  every  claim  which  it  may  be  necessary  to  investigate  in 
order  to  adjust  and  finally  settle  the  account.  Disputes  not  af- 
fecting the  accounts  will  naturally  be  excluded  from  it."" 

143.  ACCOTJl^TINa  WITHOUT  DISSOLUTION— A  part- 
ner may  sometimes  maintain  a  bill  for  an  account- 
ing without  a  dissolution.  The  following  are  the 
principal  classes  of  cases  in  which  an  accounting 
w^ithout  a  dissolution  w^ill  be  granted: 

(a)  Where  one  partner  has  sought   to  withhold  from  his 

co-partner  the  profit  arising  from  some  secret 
transaction  (p.  3.j9). 

(b)  Where  the  partnership  is  for  a  term  of  years  still  un- 

expired, and  one  partner  has  sought  to  exclude  or 
expel  his  co-partner,  or  drive  him  to  a  dissolution 
(p.  ;J39). 

(c)  Where  the  partnership  has  proved  a  failure,  and  the 

partners  are  too  numerous  to  be  made  parties  to  the 
action,  and  a  limited  account  will  result  in  justice 
to  them,  all  (p.  ■;41). 

(d;  Where  there  is  an  agreement  for  periodical  account- 
ings or  accountings  as  to  distinct  transactions  (p.  343). 

(6)  Where  an  execution  or  attachment  has  been  levied 
against  one  partner's  interest  (p.  313j. 

»i«  Duncan  v.  Luntley,  2  Macn.  &  G.  30.     vSee,  also,  CliCford  v.  Brooke,   13 
Ves.  132;    Tannenbaum  t.  Armeny,  81  Hun,  581,  31  N.  Y.  Supp.  55. 

11"  See  Bury  v.  Allen,  1  Colly.  Ch.  589;    MacKenna  t.  Parkes,  36  Law  J.  Ch. 
866,  15  Wkly.  Rep.  217.     Cf.  Great  Western  Ins.  Co.  v.  Cunliffe,  9  Ch.  App.  525. 

118  Lindl.  Partn.  p.  493.      In  an  action  for  an  accounting,  it  is  error  to  give 
plaintiff  judgment  against  defendants  jointly  for  the  full  amount  of  his  claim, 
without  adjudging  the  respective   liabilities  of  defendants.     Gimpel   t.   Wilson, 
10  Misc.  Rep.  153,  30  N.  Y.  Supp.  942. 
GEO.PART.— 22 


338  ACTIONS    BETWEEN    PARTNERS.  (Ch.    t 

Gefieral  or  Limited  Account. 

The  account  which  a  partner  may  seek  to  have  taken  may  be 
either  a  general  account  of  the  dealings  and  transactions  of  the 
firm,  with  a  view  to  a  winding  up  of  the  partnership,  or  a  more 
limited  account,  directed  to  some  particular  transaction  as  to  which 
a  dispute  has  risen.  It  was  formerly  considered  that  no  account 
between  partners  could  be  taken  in  equity,  save  with  a  view  to 
a  dissolution;^'"  and  a  bill  praying  an  account,  but  not  a  disso- 
lution, has  been  held  bad  on  demurrer.""  But  this  rule  has  been 
gradually  relaxed,  for  it  has  been  felt  that  more  injustice  frequent- 
ly arose  from  the  refusal  of  the  court  to  do  less  than  complete  jus- 
tice than  could  have  arisen  from  interfering  to  no  greater  extent 
than  was  desired  by  tho  suitor  aggrieved."'  Accordingly,  in  Prole 
V.  Masterman,'"  where  the  promoter  of  a  company  sought  to  make 
his  co-promoters  contribute  to  a  debt  paid  by  him,  but  for  which 
tliey  were  liable  as  well  as  he,  it  was  held  that  a  decree  might  be 
made  v,  itiiout  directing  a  general  account  of  what  was  due  from  the 
plaintiff  in  respect  of  other  matters.  Again,  in  the  case  of  a  mutual 
insurance  society,  where  the  funds  of  the  society  are  answerable 
for  the  payment  of  the  moneys  due  upon  their  policies,  an  assured 
member  is  entitled  to  an  account  of  what  is  due  to  him  upon  his 
policy,  and  to  a  decree  for  the  payment  of  what  is  so  due,  without 
invohing  himself  in  any  general  account  of  the  dealings  and  trans 
actions  of  the  society,  or  seeking  for  a  dissolution  thereof."'  The 
old  rule,  therefore,  that  a  decree  for  an  account  betwe^^n  partners 
will  not  be  made  save  with  a  view  to  the  final  determination  of  all 
questions  and  cross  claims  between  them,  and  to  a  dissolution  of 

ii»  LIndl.  Partn.  p.  49.');  Fornian  r.  Hotnfrny,  2  Vos.  &  B.  329;  lyoscombe 
V.  Russell,  4  Sim.  8;  Knebell  v.  White,  2  Younge  &  C.  Exch.  15.  See,  also. 
Glynn  v.  Thetteplace,  26  Mich.  883;  rhillipa  v.  Blatchford,  137  Mass.  510; 
Davis  V.  Davis.  (50  Miss.  615;  Coville  v.  Gilman,  13  W.  Va.  319;  Cl*rk  t. 
Gridley,  41  Cal.  119. 

120  Loscombe  v,  Russell,  4  Sim.  8. 

121  t^ee  aute.  p.  334. 

122  21  Beav.  61.      Of.  Munnings  v.  Bury,  Tam.  147. 

123  See  Bromley  v.  Williams,  32  Beav.  177;  Hutchinson  r.  Wright,  25  BeaT. 
♦44;    Taylor  v.  Dean,  22  Beav.  429. 


§    143;  ACCOUNTING    WITHOUT    DISSOLUTION.  339 

the  partnership,  must  be  regarded  as  considerably  relaxed,  although 
it  is  still  applicable  where  there  is  no  reason  for  departing  from  it.^** 

Account    Where    One   Partner   Withholds    What   the  Firm  is  Enti- 
tled to. 

Where  one  partner  has  obtained  a  secret  benefit,  which,  upon  prin- 
ciples already  discussed,  all  the  partners  are  entitled  to,  but  from 
which  he  seeks  to  exclude  his  co-partuers.  they  can  obtain  their 
share  of  such  benefit  by  an  action  for  an  account,  and  such  action 
is  sustainable,  although  no  dissolution  is  sought.^"  The  equity  of 
the  firm,  however,  is  against  the  delinquent  partner  only,  and  where 
the  benefit  which  the  plaintiffs  assert  their  right  to  share  has  not 
yet  been  obtaim-d.  but  only  agreed  for  by  their  co-partner,  the 
plaintiffs  have  no  locus  standi  against  a  pereon  with  whom  the 
agreement  has  been  entered  into  by  such  partner,  and  cannot  there- 
fore restrain  such  persona  from  performing  that  agreement.  The 
proper  course  for  the  aggrieved  partners  to  take  is  to  proceed 
against  their  co-partner,  and  claim  from  him  the  benefit  of  the  agree- 
ment into  which  he  has  entered."' 

Account  in   Cases  of  Exclusion. 

Where  the  partnership  is  for  a  term  of  years  still  unexpired, 
and  one  partner  has  souglit  to  exclude  or  expel  his  co-partner,  or 
to  drive  him  to  dissolution,  an  account  has  been  directed,  although 
no  dissolution  has  been  asked."'  The  general  proposition  that 
courts  of  equity  would  interfere  under  the  circumstances  now  sup- 

i«4  See  Ambler  v.  Whipple.  20  Wall.  546;  Patterson  t.  Ware,  10  Ala.  444; 
Fairchild  t.  Valentine,  7   Rob.   (N.   Y.)  564. 

126  Lindl.  Partn.  4l)r».  See,  also,  llichens  v.  Conpreve,  1  Russ.  &  M.  150; 
Fawcett  v.  Whitebouse,  Id.  132;  Beck  v.  Kantorowicz,  3  Kay  &  J.  230;  Society 
for  Illustration  of  Practical  Knowledge  v.  Abbott.  2  Beav.  559;  Davis  t.  Davis, 
60  Miss.  015;    Traphapen  v.  Burt,  67  N.  Y.  80. 

i2«  Lindl.  Partn.  496;  Alder  v.  F'ouracre,  8  Swanst.  Ch.  489.  Where  defend- 
ant transferred  certain  partnership  property  to  a  third  person,  his  co-partner  !■ 
not  obliged  to  rely  on  an  action  for  damages,  but  may  sue  for  an  accounting, 
and  compel  a  surrender  of  his  share  of  the  proceeds  of  such  sale.  Tannenbaum 
V.  Armcny,  81  Uuu,  581.   31  N.  Y.  Supp.  55. 

i«T  Davis  V.  Davis,  60  Miss.  615;  Traphagen  v.  Burt,  67  N.  Y.  30;  Knowie* 
v.  Haughton,  11  Ves.  168;  Harrison  v.  Armitage,  4  Madd.  143;  Blisaet  v. 
Daniel,  10  Uare,  493. 


340  ACTIONS   BETWEEN    PABTNERS.  (Ch.   7 

posed  was  laid  down  in  Harrison  v.  Armitage/'*  where,  however, 
no  account  was  directed,  inasmuch  as  the  evidence  did  not  establish 
a  partnership.  But  in  Chappie  v.  Cadell  ^-*  an  account  was  directed 
at  the  suit  of  a  minority,  where  the  majority  had  sold  a  partnership 
newspaper  to  a  stranger,  and  some  of  the  more  active  of  the  ma- 
jority had  then  entered  into  a  fresh  agreement  with  the  purchaser 
to  carry  on  the  paper  in  partnership  with  him.  Richards  v.  Dav- 
ies  ^'°  went  a  step  further.  There  a  partnership  had  been  entered 
into  for  a  term  of  years,  which  was  still  unexpired.  The  defendant 
would  come  to  no  account  with  the  plaintiff  respecting  the  partner- 
ship dealings  and  transactions,  but.  on  the  application  of  the  plain- 
tiff, a  decree  for  an  account  of  all  past  transactions  was  made.  Sur 
John  Leach,  in  pronouncing  judgment,  observed  that  the  plaintiff 
bad  no  relief  at  law  for  money  due  to  him  on  a  partnership  account; 
that,  if  a  court  of  equity  refused  him  relief,  he  would  be  wholly 
without  remedy;  and  in  answer  to  the  objection  that,  if  such  a  suit 
were  entertained,  the  defendant  might  be  vexed  by  a  new  bill  when- 
ever new  profits  accrued,*'*  his  honor  asked  what  right  would  the 
defendant  have  to  complain  of  such  new  bill  if  he  repeated  the  in- 
justice of  withholding  what  was  due  to  the  plaintiff? 

Defendant  Seeking  to  Drive  Plaintiff  to  Dissoloe. 

Fairthome  v.  Weston  *"  is  another  authority  in  point.  In  that 
case  two  solicitors  entered  into  partnership  for  a  term  of  years,  and, 
before  the  term  expired,  the  defendant  conducted  himself  in  such  a 
way  as  to  prevent  the  possibility  of  the  partnership  business  being 
carried  on.  The  defendant's  object  was  to  comi)el  the  plaintiff  to 
dissolve.  Tlie  plaintiff,  however,  instead  of  dissolving,  filed  a  bill 
for  an  account  of  the  partnership  dealings  and  transactions  since 
the  last  settlement,  and  for  a  receiver.  The  defendant  insisted  that 
the  plaintiff  was  entitled  to  no  relief  except  with  a  view  to  a  dis- 
solution ;  but  the  court  held  otherwise,  and  observed  that  there  was 
no  universal  rule  to  the  effect  that  a  bill,  asking  for  a  particular 
account,  but  not  for  a  dissolution,  was  demurrable;    and  that,  if 

128  4  Madd.  143.  129  Jac.  537.  iso2  Russ.  &  M.  347. 

131  This  objection  was  made  by  Lord  Eldon  in  Forman  v.  liomfray,  2  Vea.  & 
B.  330;  by  Vice  Chancellor  Shadwell  in  Loscombe  v.  Russell,  4  Sim.  8;  and  by 
Baron  Alderson  in  Kuebell  v.  White,  2  Youuge  «k  C.  Exch.  15, 

182  3  Hare,  387. 


§    143)  ACCOUNTING    WITHOUT    DISSOLUTION.  341 

there  were  any  such  rule,  a  person  fraudulently  inclined  might,  of 
his  mere  will  and  pleasure,  compel  his  co-partner  to  submit  lo  the 
alternative  of  dissolving  a  partnership,  or  ruin  him  by  a  continued 
violation  of  the  partnership  contract. 

Again,  where  a  person  seeks  to  establish  a  partnership  with  an- 
other who  denies  the  plaintifif's  title  to  be  considered  a  partner, 
if  the  former  is  successful  upon  the  main  point  in  dispute,  an  ac- 
count of  the  past  dealings  and  transactions  will  be  decreed,  although 
the  plaintiff  does  not  seek  for  a  dissolution  of  the  partnership  which 
he  has  proved  to  exist."'  Upon  the  same  principle,  it  is  appre- 
hended that  if  a  partner  is  wrongfully  expelled,  and  he  is  restored 
to  his  status  as  a  partner  by  the  judgment  of  the  court,  an  account 
will  be  directed,  but  the  partnei-ship  will  not  necessarily  be  dis 
solved.*'* 
Account  Where  Concern  has  Failed. 

^Yhere  the  partnership  has  proved  a  failure,  and  the  partners  are 
too  numerous  to  be  made  parties  to  the  action,  and  a  limited  account 
will  result  in  justice  to  them  all,  such  an  account  will  be  directed, 
although  a  dissolution  is  not  asked  for.""  The  leading  case  in 
support  of  this  proposition  is  Wallworth  v.  Holt,"'  in  which  Lord 
Cottenhnra,  in  an  elaborate  and  justly  celebrated  judgment,  over- 
ruled a  demurrer  to  a  bill  by  some  of  the  stockholders  of  an  insol- 
vent joint-stock  bank,  on  behalf  of  themselves  and  others,  against  the 
directors,  trustees,  and  public  officer  of  the  company,  and  certain 
shareholders  who  had  not  paid  up  their  calls,  praying  that  an  account 
might  be  taken  of  all  the  partnership  assets,  and  that  the  outstand- 
ing assets  might  be  got  in  by  a  receiver,  and  that  the  whole  might 
be  converted  into  money,  and  applied  towards  the  satisfaction  of 
the  partnership  debts.  The  bill  in  this  case  was  filed  for  the  sole 
purpose  of  having  the  assets  of  the  company  applied  in  payment  of 
its  joint  debts.  It  did  not  pray  an  account  of  the  partnership  deal- 
ings and  transactions,  for  the  purpose  of  obtaining  a  division  of  the 
profits  (if  any)  among  the  persons  entitled  thereto.  If  it  had,  proba- 
bly a  decree  would  ha^e  been  refused,  either  because  a  dissolution 

i«»  Knowles  v.  Haughton,  11  Ves.  168,  as  reported  in  Colly.  Partn.  (tJth  Kd.) 
431,  note. 
i«*  See  Blisset  v.  Daniel,  10  Hare,  493;    Lindi.  Partn.  p.  498. 
186  Lindl.   Partn.  498.  ise  4  Mylne  &  C.  619. 


342  ACTIONS    BETWEEN    PARTNERS.  (Ch.  7 

had  not  been  asked,  or  because  all  the  shareholders  were  not  parties 
to  the  bill.^" 

But  since  Wallworth  v.  Holt  other  cases  have  been  decided,  in 
which  bills  praying  for  a  division  of  the  surplus  assets  among  the 
shareholders,  but  not  expressly  praying  for  a  dissolution,  have  been 
held  good  on  demurrer/'*  The  case  which  has  gone  furthest  in  this 
direction  is  Sheppard  v.  Oxenford;  ^'®  for  there  every  kind  of  relief 
which  would  have  been  required  in  the  event  of  a  dissolution  was 
prayed  for,  although  a  dissolution  in  terms  was  not  asked  for.  In 
Sheppard  v.  Oxenford  a  number  of  persons  formed  an  association 
for  working  mines  in  Brazil.  The  defendant  was  the  sole  trustee 
of  the  pro{>erty,  imd  the  sole  director.  Disputes  having  arisen,  a 
bill  was  filed  by  a  shareholder  on  behalf  of  himself  and  all  the  other 
shareholders,  against  the  defendant,  for  an  account  of  the  moneys 
received  and  paid  by  him  on  behalf  of  the  association,  and  for  an 
account  of  its  debts,  and  for  their  payment  out  of  the  available  as- 
sets, and  for  a  sale,  if  necessary  for  that  purpose,  of  part  of  the 
property',  and  for  a  division  of  profits.  The  bill  also  prayed  an  in- 
junction to  restrain  the  defendant  from  selling  or  disposing  of  the 
property,  and  for  a  receiver  to  get  in  the  debts  due  to  the  associa- 
tion, and  to  manage  the  affairs  thereof,  until  the  accounts  were 
taken,  but  no  dissolution  was  asked.  A  demurrer  to  this  bill  was 
put  in  and  overruled;  ^*°  and  an  injunction  was  granted,  restraining 
the  defendant  from  selling  or  disposing  of  the  property  otherwise 
than  in  the  ordinary  course  of  business-  and  a  receiver  and  manager 
of  the  property  in  this  country  was  appointed.  It  is  to  be  observed 
that,  although  this  was  a  case  of  a  mine,  tbe  mine  was  in  a  foreign 
country,  and  was,  strictly  speaking,  partnership  property,  and  not 
merely  so  much  land  belonging  jointly  or  in  common  to  several  co- 
owners. 

137  See  Richardson  r.  Hastings,  7  Beay.  323,  11  Bear.  17;  Deeks  t.  Stanhope, 
14  Sim.  57. 

188  See  Apperly  v.  Page,  1  Phil.  Ch.  779;  Wilson  v.  Stanhope,  2  Colly.  629; 
Cooper  v.  Webb.  15  Sim.  454;    Clements  v.  Bowes,  17  Sim.  167. 

i8»  1  Kay  &  J.  491. 

i**  See  Sheppard  t.  Oxenford,  1  Kay  &  J.  491,  501. 


§    143)  ACCOUNTING    WITHOUT    DISSOLUTION.  343 

Resiilt  of  Latest  Cases. 

Having  regard  to  the  decisions  in  Sheppard  v.  Oxenford  and  other 
cases  of  a  similar  l^ind,  it  is  conceived  that  the  doctrine  established 
in  Wallworth  v.  Holt  may  be  considered  as  extending  not  only  to 
cases  where  an  account  is  sought  for  the  purpose  of  having  joint  as- 
sets applied  in  discharge  of  the  joint  liabilities,  but  also  to  cases 
where  an  account  is  sought  for  the  additional  purpose  of  obtaining 
a  division  of  the  surplus  assets  and  profits  among  the  persons  en- 
titled thereto.  If  this  be  so,  the  last  remnant  of  the  doctrine  that, 
in  partnership  cases,  there  can  be  no  account  without  a  dissolution, 
must  be  considered  as  swept  away,  at  least  as  regards  partnerships 
the  members  of  which  are  too  numerous  to  be  made  parties  to  the 
action.^** 
Agreements  for  Periodical  Accountings. 

An  agreement  between  pai-tners  for  a  periodical  accounting,  or  for 
the  settlement  of  distinct  transactions  as  they  occur,  may  be  en- 
forced without  a  dissolution.^*^  Thus,  in  the  case  of  a  partnership 
to  deal  in  lands,  where  it  was  agreed  that  the  proceeds  of  each  sale 
should  be  divided  at  the  time  made,  it  was  held  that  a  division  of 
the  proceeds  could  be  compelled  without  ordering  the  sale  of  otJie. 
lands.^** 
Execution  against  One  Partner's  Interest, 

Where  the  interest  of  a  partner  has  been  seized  on  execution  or 
attachment  by  his  iudividual  creditor,  a  bill  for  an  accounting  to 
determine  what,  if  any,  interest  such  partner  had,  may  be  main- 
tained without  a  dissolution.  "Where  the  court  is  asked  to  order 
an  account  between  partners,  in  order  to  determine  whether,  at 
the  time  of  the  attachment,  the  partner  proceeded  against  at  law 
by  his  creditor  had  any  beneficial  interest  in  tlie  property  attached, 
the  same  reason  for  refusal  to  proceed  does  not  exist  as  in  case  of  a 
suit  between  partners,  where  the  object  is  to  ascertain  their  relative 
rights,  with  a  view  to  decreeing  the  payment  of  a  balance  by  one  to 
the  other.     The  creditor  attaches  the  interest  of  one  paitner  as  it 

1*1  Lindl.  Partn.  p.  500.      See  Coville  v.  Gilinan,  13  W.  Va.  31-1. 
142  Wadley  v.  Jones,  55  Ga.  320;    Attorney  (Teneral  v.  State  Bank,  1   Uev.  & 
B.  Eq.  (N.  C.)  545.      See,  also,  Denver  v.  Roane,  99  U.  S.  355. 
14S  Patterson   v.   Ware.   10  Ala.  444. 


344  ACTIONS    BETWEEN    PAKTNERS.  C^h-  7 

exists  at  the  time  of  the  attachment.  Subsequent  changes  in  the 
relations  of  the  partners  inter  sese,  or  in  the  rights  of  creditors, 
which  are  only  substituted  rights  of  the  partneis,  are  not  neces- 
sary to  be  ascertained."  ^** 

SPECIFIC  PERFORMANCE. 

144.  Subject  to  the  rule  that  courts  will  not  undertake  the 
management  of  a  going  concern,  specific  perform- 
ance of  agreements  between  partners  is  governed 
by  ordinary  principles. 

It  has  already  been  seen  to  what  extent  specific  performance  of 
agreements  to  form  a  partnership  will  be  enforced.^*"  Relief  in  the 
shape  of  specific  performance  may  be  required  for  other  purposes 
besides  carrying  into  execution  agreements  to  form  partnerships. 
The  assistance  of  a  court  is  often  requisite  to  compel  those  engaged 
in  a  going  concern  to  act  conformably  to  the  articles  of  partnership, 
and  also  to  compel  those  who  have  dissolved  partnership  to  observe 
the  stipulations  into  which  they  have  entered.  The  principles  on 
which  the  courts  act  in  granting  or  withholding  assistance,  when 
sought  for  the  former  pui'pose,  have  already  been  considered;  and, 
with  respect  to  the  specific  performance,  after  a  dissolution  of  part- 
nership, of  agreements  entered  into  by  the  partners  previously  to 
or  at  the  time  of  dissolution,  it  need  only  be  observed  that  relief 
will  be  granted  or  refused  upon  the  principles  by  which  the  court 
is  ordinarily  guided  in  questions  of  specific  performance,  and  that 
nothing  turns  on  the  circumstance  of  the  litigants  having  been  part- 
ners. It  would,  therefore,  be  foreign  to  the  objects  of  the  present 
treatise  to  prosecute  this  subject  further;  but,  for  purposes  of  ref- 
erence, it  may  be  useful  to  mention  that  the  court  has  enforced  the 
following  agreements,  entered  into  upon  or  with  a  view  to  a  dis- 
solution, namely,  agreements  not  to  carry  on  business  within  a  cer- 
tain distance  or  for  a  certain  space  of  time;^*"    agreements  as  to 

144  Cropper  t.  Coburn,  2  Curt.  4G5,  Fed.  Caa.  No.  3,416. 
146  See  ante,  p.  75. 

148  Whittaker  v.  Howe,  8  Bear.  383;    Turner  t.  Major,  3  GiCP.  442.     And  «e« 
Coate*  v.  Coates,  6  Madd.  287;    Williams  \.  Williams,  1  Wils.  Ch.  473,  note. 


§    145)  INJUNCTION.  346 

the  custody  of  partnership  books,  and  the  furnishing  of  copies  there- 
of; ^*^  agreements  that  a  third  party,  and  he  only,  shall  get  In 
debts;  ^**  agreements  that  the  value  of  the  share  of  an  outgoing 
or  a  deceased  partner  shall  be  ascertained  in  a  specified  way,  and 
taken  accordingly;^*"  agreements  that  an  outgoing  partner  shall 
offer  his  share  to  his  co-partners  before  selling  it  to  other  persons;  ^'"* 
agreements  to  grant  an  annuity  to  a  retiring  partner  and  his 
widow  ;"^  agreements  not  to  divulge  or  make  use  of  a  trade 
secret^" 

INJUNCTION. 

146.  The  granting-  of  an  injunction  to  protect  a  partner's 
rights  is  governed  by  ordinary  principles.  It  may 
be  granted,  although  no  dissolution  of  the  partner- 
ship is  sought. 

Injunctions  and  Receivers. 

In  order  to  prevent  a  partner  from  acting  contrary  to  the  agree- 
ment into  which  he  may  have  entered  with  his  co-partners,  or  con- 
trary to  the  good  faith  which,  independently  of  any  agreement,  is 
to  be  observed  by  one  partner  towards  his  co-partner,  it  is  some 
times  necessary  for  a  court  to  interfere,  either  by  granting  an  in 
junction  against  the  partner  complained  of,  or  by  taking  the  af 
fairs  of  the  partnership  out  of  the  hands  of  all  the  partners,  and 
intrusting  them  to  a  receiver  of  its  own  appointment.  These  two 
modes  of  interference  require  to  be  considered  separately,  for  they 
are  not  had  recourse  to  indiscriminately.     The  appointment  of  a 

i*T  Llngea  v.  Simpson,  1  Sim.  &  S.  600.  And  see  Whittaker  t.  Howe,  8 
Beav.  383. 

1*8  Davia  T.  Amer,  3  Drew.  64;    Turner  v.  Major,  8  GiCf.  442. 

i*»  Morris  v.  Kearsley,  2  Younge  &  C.  Exch.  139;  Essex  v.  Essex,  20  Bear. 
442;  King  v.  Chuck,  17  Beav.  325.  And  see  Featherstonhaugh  v.  Turner,  25 
Beav.  382,  and  Gibson  v.  Goldsmid,  5  De  Gex,  M.  &  G.  757,  reversing  18  Beav. 
584.  Cf.  Downs  v.  Collins,  6  Hare,  418,  where  to  have  enforced  the  agreement 
would  have  been  to  decree  specific  performance  of  a  contract  for  a  partnership; 
and  Cooper  v.  Hood,  7  Wkly.  Rep.  83,  where  a  decree  was  refused  on  the  ground 
that  the  agreement  sought  to  be  enforced  was  too  vague  in  its  terms. 

160  Homfray  v.  Fothergill,  L.  R.  1  Eq.  567. 

181  Aubin  V.  Holt,  2  Kay  &.  J.  66;   Pa«e  v.  Cox,  10  Hare,  163. 

162  Morison  v.  Moat,  9  Hare,  241. 


346  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

receiver,  it  is  true,  always  operates  as  an  injunction,  for  the  court 

will  not  suffer  its  officer  to  be  interfered  with  by  any  one;^'^   but 

it  by  no  means  follows  that,  because  the  court  will  not  take  the 

affairs  of  a  partnership  into  its  own  hands,  it  will  not  restrain  some 

one  or  more  of  the  partners  from  doing  what  may  be  complained 

of.^" 

Injunction   Chanted  though  no  Dissolution  is  SotLght. 

Whatever  doubt  there  may  have  been  upon  the  subject,  it  is  clear 
that  an  injunction  will  not  be  refused  simply  because  no  dissolution 
of  partnership  is  sought."''  Indeed,  injunctions  are  often  granted 
for  the  very  purpose  of  avoiding  a  dissolution.  "Injunctions  have 
been  granted  at  the  instance  of  one  partner  against  his  co-partner, 
both  before  and  after  dissolution,  where  necessary  to  restrain 
breaches  of  duty  and  prevent  injury  to  the  partnership  affairs. 
While  not  every  deviation  from  the  partnership  articles,  or  trifling 
violations  of  duty,  will  induce  courts  of  equity  to  interfere,  any 
substantial  violation  of  the  rights  of  the  co-partnership  authorizes 
courts  of  equity,  in  the  exercise  of  sound  discretion,  to  make  use 
of  this  extraordinary  remedy  to  prevent  partners  from  doing  mis- 
chief." "• 

iB»  See  Helmore  v.  Smith.  35  Ch.  DIt.  449;    Llndl.  Fartn.  p.  538. 

1B4  See  Hall  v.  Hall,  8  Macn.  &  G.  79,  85;  Rutland  Marble  Co.  t.  Klpley,  10 
Wall.  339;  Pirtle  v.  Penn,  3  Dana  (Ky.)  247;  Van  Kuren  v.  Manufacturing 
Co.,  13  N.  J.  Eq.  303;  New  v.  Wright,  44  Miss.  202;  Wilson  v.  Fitchter,  11 
N.  J.  Eq.  71;  Ballow  v.  Wood,  8  Cush.  (Mass.)  48.  An  injunction  will  be  grant- 
ed to  restrain  one  partner  from  using  partnership  property  in  a  manner  not  au- 
thorized in  the  contract  of  partnership.  New  v.  Wright,  44  Miss.  202.  Gen- 
erally, as  to  injunctions  to  protect  rights  after  dissolution,  see  Wilkinson  v.  Til- 
den,  9  Fed.  683;  Fletcher  v.  Vandusen,  52  Iowa,  448,  3  N.  W.  488;  Shannon 
V.  Wright,  60  Md.  520;  McGowan  Bros.  Pump  &  Mach.  Co.  t.  McGowan,  22 
Ohio  St.  370. 

156  Lindl.  Partn.  p.  539. 

159  Lindl.  Partn.  (Wentw.  Ed.)  p.  539,  note  1,  citing  Ballou  v.  W^ood,  supra; 
Stockdale  v.  Ullery,  37  Pa.  St.  486;  Marshall  v.  Johnson,  33  Ga.  500;  Kean 
v.  Johnson,  9  N.  J.  Eq.  401;  Roberts  t.  McKee,  29  Ga.  161;  Rutland  Marble 
Co.  V.  Ripley,  10  Wall.  339. 


§    145)  INJUNCTION.  347 

Illustrations. 

Partners  maj  be  enjoined  from  excluding  their  co  partner  from 
the  partnership  business;  ^^'  from  using  pai'tnership  property  con- 
trary to  the  partnership  agreement;  ^"^^  from  changing  the  funda- 
mental nature  of  the  partnership  business;  ^^^  from  carrying  on  a 
competing  business;  ^°°  and  injunctions  have  been  granted  in  many 
other  classes  of  cases.^'^  Even  where  the  partnership  is  at  will, 
an  injunction  may  be  granted,  but  not,  of  course,  where  it  would  be 
valueless.^  *^ 

Injunction  in  Action  for  Dissolution. 

In  an  action  instituted  for  the  purpose  of  having  a  partnership 
dissolved,  or  of  having  an  account  taken  after  a  partnership  has 
been  dissolved,  it  has  never  been  doubted  that  an  injunction  will 
be  granted  to  restrain  one  of  the  partners  from  doing  any  act  which 
will  impede  the  winding  up  of  the  concern.  For  example,  one  part- 
ner will  be  restrained  from  carrying  on  the  concern  for  any  other 
purpose  than  winding  up;  ^^'  from  damaging  the  value  of  the  good 
will,  if  it  ought  to  be  sold  for  the  benefit  of  all;^"*  from  getting 
in  the  assets  if  he  is  likely  to  misapply  them.^"  A  surviving  part- 
ner will  be  restrained  from  improperly  ejecting  the  representatives 
of  his  deceased  co-partner;^"  and  they,  on  the  other  hand,  will  be 

167  See  Rutland  Marble  Co.  t.  Ripley.  10  Wall.  339;  Pirtle  v.  Penn,  3  Dana 
(Ky.)  247;  Wolbert  v.  Harris,  7  N.  J.  Eq.  HOS;  Hall  t.  Hall,  12  Bear.  414; 
Petit  V.  Chevelier,  13  N.  J.  Eq.  181. 

188  New  V.  Wright,  44  Miss.  202;   Hall  v.  Hall,  12  Beav.  414. 

160  Natusch  V.  Irvinp,  2  Coop.  t.  Cott.  358. 

180  Marshall  v.  Johnson.  33  Ga.  500;    Kemble  v.  Kean,  6  Sim.  333,  335. 

i«i  See  Gla.ssington  v.  Thwaites,  1  Sim.  &  S.  124;  Stockdale  v.  Ullery,  37  Pa. 
St.  48U;  Morris  v.  Colman,  18  Ves.  437;  Levine  v.  Michel,  35  La.  Ann.  1121; 
England  v.  Curling,  8  Beav.  129. 

162  Liudl.  Partn.  p.  540.  See  IVacock  t.  Peacock,  16  Ves.  49;  Miles  t. 
Thomas,  9  Sim.  (iOG. 

i«3  See  De  Tastet  v.  Bordonave,  Jac.  516;  Wilson  v.  Fitchter,  11  N.  J.  Eq.  71; 
Marshall  v.  Watson,  25  Beav.  .501;    Charlton  v.  Poulter,  19  Ves.  148,  note. 

18*  Turner  v.  Major,  3  Giff.  442;  Bradbury  v,  Dickens,  27  Beav.  53.  In  the 
last  case  the  defendant  was  advertising  the  discontinuance  of  a  partnership 
periodical  of  which  he  was  the  editor. 

186  O'Brien  v.  Cooke,  Ir.  R.  5  Eq.  51.  There  the  plaintiff  was  allowed  to  get 
them  in,  indemnifying  the  defendant  against  costs,  &c. 

186  Elliot  V.  Brown,  3  Swaust.  489,  note;  Hawkins  v,  Hawkins,  4  Jur.  (N.  S.) 
1045. 


348  ACTIONS    BETWEEN    PARTKEKS.  {Gh.  7 

restrained  from  making  any  improper  use  of  partnership  property, 
the  legal  estate  of  which  may  happen  to  be  in  them.^'^  So  a  sur- 
viving partner  will  be  restrained  from  disposing  of  or  getting  in 
the  partnership  assets,  if  he  has  already  been  guilty  of  breaches  of 
trust  with  reference  to  them.^"'  Again,  in  an  action  for  a  disso- 
lution, a  partner  will  be  restrained  from  improperly  interfering  with 
or  obstructing  the  partnership  business;  ^*^  from  drawing,  accept- 
ing, or  indorsing  bills  of  exchange  in  the  partnership  name  for  other 
than  partnership  purposes;  ^^°  from  getting  in  debts  owing  to  the 
firm;*^*  from  withholding  the  partnership  books;"*  and,  gener- 
ally, on  a  dissolution,  one  partner  will  be  restrained  from  injuring 
the  property  of  the  firm.^'* 

Injunction  to  Protect  Partners  from  the  Representatives  of  a  Co-part- 
ner. 

So  the  court  will  interfere  by  injunction  to  protect  partners  from 
the  interference  of  persons  claiming  the  share  of  a  late  co-partner, 
by  reason  of  his  death  or  bankruptcy,  or  under  an  execution."* 

Injunction  to  Enforce  Special  Agreements. 

So,  after  a  dissolution,  the  court  constantly  interferes  by  in- 
junction to  restrain  breaches  of  special  agreements  entered  into  be- 
tween the  partners, — such,  for  example,  as  agreements  not  to  carry 

i«T  Alder  v.  Fourncre,  3  Swanst.  Ch.  489. 

i«8  Hartz  V.  Schrader,  8  Ves.  317. 

i«»  Smith  V.  Jeyes,  4  Beav.  503;    Charlton  ▼.  Poulter.  19  Ves.  148.  note. 

iTO  Williams  v.  Bingley,  2  Vern.  278,  note;  Colly.  Partn.  233;  Jervis  T. 
White,  7  Ves.  413;  Hood  v.  Aston,  1  Russ.  412.  In  the  two  last  cases,  the 
injiinr-tion  restrained  mah'i  fide  indorsees  for  value  from  parting  with  or  negotiat- 
ing the  securities. 

171  Read  V.  Bowers,  4  Brown  Ch.  441. 

172  Taylor  v.  Davis,  3  Beav.  388,  note;  Grcatrex  v.  Greatrex,  1  De  Gex  & 
S.  692;    Charlton  v.  Poulter,  19  Ves.  148,  note. 

173  See  Marshall  v.  Watson,  25  Beav.  501,  where  an  injunction  to  restrain  a 
partner  from  publishing  the  accounts  of  the  firm,  was  under  special  circum- 
stances refused.  See,  also,  as  to  making  slanderous  statements  and  diverting 
letters,  Hermann  Loog  v.  Bean,  26  Ch.  Div.  306,  a  case  of  agency,  but  applicable 
to  partnerships. 

174  Philips  V.  Atkinson,  2  Brown,  Ch.  272;  Bevan  v.  Lewis,  1  Sim.  376;  Allen 
V.  Kilbre,  4  Madd.  464.  See,  also,  ante,  p.  141,  "Execution  against  Partner's 
Stmr«." 


§    145)  INJUNCTION.  349 

on  business;*"  not  to  get  in  debts  of  the  flrm;^"  not  to  divulge 
a  trade  secret.*^^  So,  if  a  partner  retires,  and  assigns  his  interest 
in  the  partnership  and  in  the  good  will  thereof  to  the  continuing 
partners,  he  will  be  restrained  from  recommencing  or  carrying  on 
business  in  such  a  way  as  to  lead  people  to  suppose  that  he  is  the 
successor  of  or  still  connected  with  the  old  fii-m,^^' 

Injunction  in  Case  of  Misconduct. 

Before  leaving  this  subject,  it  is  necessary  to  make  a  few  ob- 
servations on  the  kind  of  misconduct  which  will  induce  the  court 
to  grant  an  injunction  against  one  partner  at  the  suit  of  another. 
Mere  squabbles  and  improprieties,  arising  from  infirmities  of  temper, 
are  not  considered  sufficient  ground  for  an  injunction;*^'  but  if 
one  partner  excludes  his  co-partner  from  his  rightful  interference 
in  the  management  of  the  partnership  affairs,  or  if  he  persists  in 
acting  in  violation  of  the  partnership  articles  on  any  point  of  im- 
portance, or  so  grossly  misconducts  himself  as  to  render  it  im- 
possible for  the  business  to  be  carried  on  in  a  proper  manner,  the 
court  will  interfere  for  the  protection  of  the  other  partners.**" 
Where,  however,  the  partner  complained  of  has  by  agreement  been 
constituted  the  active  managing  partner,  the  court  will  not  inter 
fere  with  him  unless  a  strong  case  be  made  out  against  him;  *'*  noi- 
will  the  court  restrain  a  partner  from  acting  as  such  merely  be 
cause,  if  he  is  known  so  to  do,  the  confidence  placed  in  the  firm  bv 
the  public  will  be  shaken.**" 

iTB  Whittaker  t.  Howe,  3  Beav.  383. 

176  Davis  V.  Amer,  3  Drew,  64;  Hartz  t.  Schrader,  8  Ves.  317;  Ellis  r.  Com- 
mander,  1   Strob.   Eq.   (S.  C.)   188. 

1T7  Morison  v.  Moat,  9  Hare.  241;   Roberts  ▼.  McKee,  '2!d  Ga.  IHl. 

1T8  Chnrton  v.  Douglas.  Johns.  Eng.  Ch.  174. 

17  8  See  Marshall  v.  Colraan.  2  Jac.  &  W.  266;  Smith  v.  Jeyes,  4  Beav.  503; 
Lawson  v.  Morgan,  1  Price,  303;  Cofton  v.  Horner,  5  Price,  f)37;  Warder  v. 
Stilwell,  3  Jur.  (N.  S.)  9. 

180  In  Anderson  v.  Wallace,  2  Moll.  .'i40,  one  of  several  partners  who  horsed 
a  mail  coach  was  restrained  from  horsing  it  on  the  ground  that  he  did  it  so 
badly  as  to  imperil  the  business  of  the  concern. 

181  See  Lawson  v.  Morgan,  1  Price,  303;  Waters  v.  Taylor,  IB  y^n.  10.  See, 
also.  Walker  v.   Hirsch,  27  Ch.   Div.   460. 

182  Aqou,  2  Kay  &  J.  441. 


350  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

Partner  Applying  for  Injunction  must  Come  with  Clean  Hands, 

It  need  scarcely  be  observed  that  a  partner  who  seeks  au  injunc- 
tion against  his  co-partner  must  himself  be  able  and  willing  to  per- 
form his  own  part  of  any  agreement  which  he  seeks  to  restrain  his 
co-partner  from  breaking;  ^®^  and  the  plaintiff's  own  misconduct 
may  be  a  complete  bar  to  his  application,  however  wrong  the  defend- 
ant's conduct  may  have  been.^®*  As  stated  by  Lord  Eldon  in  Const 
V.  Harris,  a  partner  who  complains  that  his  co-partners  do  not  do 
their  duty  to  him  must  be  ready  at  all  times,  and  offer,  to  do  his 
duty  to  them.^*"* 

Injunction  to  Restrain  Holding  Out. 

In  consequence  of  the  liability  which  attaches  to  a  person  who 
holds  himself  out  as  a  partner  with  others,  and  of  the  danger  run 
by  a  person  who  is  held  out  as  a  partner  with  others,  even  although 
it  may  not  be  with  his  consent,  a  court  will,  it  seems,  interfere  and 
restrain  a  person  from  holding  out  another  as  partner  with  him, 
without  the  authority  of  that  other. ^" 

RECEIVERS. 

146.  The  appointment   of  a  receiver  of  partnership  prop- 
erty rests  in  the  sound  discretion  of  the  chancellor. 
This  discretion   is  exercised  subject   to  the  folio-w- 
ing general  rules: 
(a)  A  receiver  will  not  be  appointed  unless  a  dissolution 

be  sought,  except 
EXCEPTIONS — (1)  Where  a  receiver  is  necessary  to  pre- 
serve the  property  until  final  hearing,  and 
(2)  Where  a   decree  can   be   made   for   carrying  on 
the  concern  according  to  certain  terms,  -which 
the  parties  themselves  have  agreed  upon. 

188  Smith  T.  Fromont,  2  Swanst.  Ch.  330. 

184  Littlewood  v.  Caldwell,  11  Price,  97,  where  an  injunction  was  refused,  be- 
cause the  plaintiff  had  taken  away  the  partnership  books.  Marble  Co.  v.  Kipley, 
10  Wall.  339. 

18  6  Const  V.  Harris,  Turn.  &  R.  496,  524. 

188  See  Routh  v.  Webster,  10  Beav.  561;  Bullock  t.  Chapman,  2  De  Gex  &, 
S.  211;    Lindl.  Partn.  544. 


§    146)  RECEIVERS.  351 

(b)  Before  dissolution,  a  receiver  will  not  be  appointed, 

unless  it  appears  that  plaintiff  will  be  entitled  to  a 
decree  of  dissolution,  and  that  defendant  has  been 
guilty  of  improper  conduct. 

(c)  Where  a  decree    of  dissolution   has   been  entered  on 

account  of  the  improper  conduct  of  the  parties,  a 
receiver  will  be  appointed  as  a  matter  of  course. 

(d)  After  dissolution,  a  receiver  will  be  appointed  only 

where  it  appears  either  that  a  partner  is  miscon- 
ducting himself,  or  that  the  assets  are  in  peril.  ^^ 

Prmciples  on  Which  a  JReceiver  is  Appointed. 

Where  an  application  is  made  for  a  receiver  in  partnership  cases, 
the  court  is  always  placed  in  a  position  of  very  great  difficulty.  On 
the  one  hand,  if  it  grants  the  motion,  the  effect  of  it  is  to  put  an 
end  to  the  partnership,  which  one  of  the  parties  claims  a  right  to 
have  continued;  and,  on  the  other  hand,  if  it  refuses  the  motion,  it 
leaves  the  defendant  at  liberty  to  go  on  with  the  partnership  busi- 
ness at  the  risk,  and  probably  to  the  great  loss  and  prejudice,  of  the 
dissenting  party.  Between  these  difficulties  it  is  not  very  easy  to 
select  the  course  which  is  best  to  be  taken,  but  the  court  is  under 
the  necessity  of  adopting  some  mode  of  proceeding  to  protect,  ac- 
cording to  the  best  view  it  can  take  of  the  matter,  the  interests  of 
both  parties.^ ^* 

In  granting  or  refusing  an  order  for  a  receiver  in  partnership 
cases,  the  court  does  not  act  on  the  same  principles  on  which  it 
grants  or  refuses  an  order  for  an  injunction.  In  granting  a  receiver 
of  a  partnership,  the  court  takes  the  affairs  of  the  partnership  out 
of  the  bands  of  all  the  partners,  and  intrusts  them  to  a  receiver  or 
manager  of  its  own  appointment.  In  granting  an  injunction,  the 
court  does  not  take  the  affairs  of  the  partnership  into  its  own  hands, 
but  only  restrains  one  or  more  of  the  partners  from  doing  what  may 
be  complained  of.  The  order  for  a  receiver  excludes  all  the  part- 
ners from  taking  any  part  in  the  management  of  the  concern.     The 

18  7  The  text  of  this  section  is  substantially  reproduced  from  Kerr  on  Receivers. 

188  Madgwick  v.  Wimble,  6  Beav.  495,  500;  Blakeney  v.  Dufaur,  15  Beav.  40, 
42.  Equity  has  inherent  jurisdiction  to  appoint  a  receiver  independent  of  statute. 
Cox  V.  Volkert,  SU  Mo.  505. 


352  ACTIONS    BETWEEN    PARTNERS.  (Ch.  7 

order  for  an  injunction  merely  restrains  one  of  the  partners,  who 
may  have  acted  in  breach  of  the  partnership  articles,  or  may  have 
otherwise  misconducted  himself,  from  continuing  to  act  in  the  way 
complained  of.^^'  It,  therefore,  does  not  follow  that,  because  the 
court  will  grant  an  injunction,  it  will  also  appoint  a  receiver,  or 
that,  because  it  refuses  to  appoint  a  receiver,  it  will  also  decline 
to  interfere  by  injunction. ^®°  In  every  case  where  complaints  are 
made  of  breaches  of  articles,  it  must  be  seen  whether  they  are  urged 
with  a  view  of  making  them  the  foundation  of  a  dissolution,  or  of  a 
decree  enforcing  and  carrying  on  the  partnership  according  to  the 
original  terms,  and  preventing,  by  proper  means,  those  breaches 
recurring  which  have  before  happened  by  reason  of  the  conduct  of 
the  parties.^'* 
Recemer  not  Appointed  Unless  a  Dissolution  he  Sought. 

It  is  not  according  to  the  practice  of  the  court,  where  it  is  not 
the  object  of  the  suit  to  obtain  a  dissolution  of  a  partnership,  but, 
on  the  contrary,  to  continue  the  partnership,  to  grant,  in  the  course 
of  that  suit,  the  appointment  of  a  receiver.^*^'  The  court  does  not 
interfere  with  the  management  of  a  partnership,  except  as  incidental 
to  the  object  of  the  suit, — to  wind  up  the  concern  and  divide  the 
assets.^®^  If  the  court  were  not  to  adopt  such  a  rule,  it  might  be 
called  upon  to  make  itself  the  manager  of  every  trade  in  the  king- 
dom.^"* 

Same  — Exceptions. 

Cases,  however,  may  arise  in  which  a  partner  was  so  conducting 
himself  that,  unless  a  receiver  was  appointed  before  the  hearing,  the 
partnership  concern  might  in  the  meantime  be  destroyed.     In  such 

188  See  Hall  v.  Hall,  3  Macn.  &  G.  79,  86. 

i»o  Hall  T.  Hall,  12  Beav.  414,  3  Macn.  &  G.  79;  Read  t.  Bowers,  4  Brown, 
Ch.  441;  Hartz  v.  Schrader,  8  Ves.  317,  See,  also,  Garretson  ▼.  Weaver,  3 
Edw.  Ch.  (N.  Y.)  385;   Low  v.  Holmeb,  17  N.  J.  Eq.  148. 

181  Hall  V.  Hall,  supra;    Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  593. 

162  Goodman  v.  Whitcomb,  supra;  Hall  v.  Hall,  supra;  Roberts  v.  Eberhardt, 
Kay,  148.  Disagreements  between  partners,  insufficient  as  a  ground  for  disso- 
lution, are  not  sufficient  to  sustain  the  appointment  of  a  receiver.  Sloan  ▼.  Moore, 
37  Pa.  St.  217;   McElvey  v.  Lewis,  76  N.  Y,  373. 

188  W'aters  v.  Taylor,  15  Ves.  10,  13. 

194  Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  592;  Roberts  v.  Eberhardt,  Kay, 
148. 


§    146)  RECEIVERS.  353 

case  the  court  would  appoint  an  interim  receiver.*"  A  receiver 
would  also,  there  is  no  reason  to  doubt,  be  appointed,  although  the 
dissolution  of  the  partnership  were  not  sought,  in  a  case  where 
the  question  was  one  of  the  receipt  of  money  only,  and  where,  if 
the  money  were  allowed  to  be  received  by  the  parties,  it  would  not 
be  applied  to  its  proper  purposes,  and  thus,  at  the  hearing,  there 
would  be  a  failure  of  justice,  unless  the  court  interposed  in  the 
meantime.*®'  In  Const  v.  Harris,*®^  Lord  Eldon  said  that  a  receiver 
might  be  appointed  in  a  suit  where  a  decree  could  be  made  for  carry- 
ing on  the  concern  according  to  the  terms  of  some  specific  instru- 
ment, which,  by  the  agreement  of  the  parties,  was  to  regulate  the 
mode  of  its  being  carried  on,  as  well  as  in  a  suit  for  wholly  putting 
an  end  to  the  concern;  and  a  receiver  was  appointed  in  that  case, 
although  a  dissolution  was  not  sought  by  the  bill.  The  ease  itself 
was  a  peculiar  one.  The  proprietors  of  a  theater  had  executed  a 
deed  by  which  they  covenanted  and  agreed  that  the  profits  of  the 
theater  should  be  exclusively  appropriated  to  particular  purposes, 
and  that  the  treasurer,  for  the  time  being,  should  be  irrevocably  di- 
rected so  to  apply  the  profits.  Some  years  afterwards  the  parties 
entitled  to  seven-eighths  of  the  theaiter  entered  into  an  agree- 
ment which  provided  in  some  respects  for  a  different  application  of 
the  profits,  and  otherwise  affecting  the  rights  of  a  party  interested 
in  the  remaining  one-eighth,  who  was  not  consulted  on  the  subject; 
and,  upon  the  application  of  that  party  for  the  specific  performance 
of  the  covenants  and  agreements  of  the  original  deed,  a  receiver  was 
appointed.  The  receiver  was  a  receiver  wholly  unconnected  with 
the  management.  His  office  was  purely  a  ministerial  one.  He  was 
to  receive  all  that  persons  paid  for  their  entrance  to  the  theater,  and 
to  apply  it  according  to  certain  terms  and  provisions  which  the 
parties  themselves  had  agreed  on.*" 
Necessity  of  Prayer  for  Dissolution. 

It  is  not  necessary,  in  order  to  induce  the  court  to  appoint  a  re- 
ceiver, that  the  bill  should  expressly  pray  for  a  dissolution.  It  is 
enough  that  it  be  plain  that  it  is  necessary  to  put  an  end  to  the  con- 
cern.***    If  such  be  the  case,  the  case  stands  upon  precisely  the 

196  Hall  V.  Hall,  supra.        loe  Hall  v.  Hall,  supra.        i»7  Turn.  &  R.  496^  517. 
i»8  Kerr,  Rec.  p.  81;    Hall  v.  Hall,  3  Macu.  &  G.  90^ 
i»»  Wallworth  v.  Holt,  4  Mylne  &  C.  619. 
GBO.PART.— 23 


354  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

same  basis  as  if  the  bill  had  been  filed  exclusively  for  the  purpose 
of  the  dissolution,  and  the  winding  up  of  the  concern. ^°°  The  court 
will  in  all  cases  entertain  an  application  for  a  receiver  if  the  object 
of  the  suit  is  to  wind  up  the  partnership  affairs,  and  the  appointment 
of  a  receiver  is  sought  with  that  view.^°^ 

The  mere  fact  that  the  bill  may  pray  a  dissolution  is  not  a  suffi- 
cient ground  for  the  appointment  of  a  receiver,  unless  a  state  of 
facts  is  shown  upon  the  bill  as  will,  if  proved  at  the  hearing,  entitle 
the  plaintiff  to  a  decree  for  dissolution.^"^  The  court  will  not,  upon 
motion,  appoint  a  receiver,  unless  it  sees  that  there  is  an  actual 
present  dissolution,  arising  from  the  acts  of  the  parties,  or  that, 
at  the  hearing,  it  will  dissolve  the  partnership.  K  there  has  been 
no  misconduct,  or  no  such  violation  of  the  articles  as  to  entitle  the 
plaintiff  to  a  dissolution,  a  receiver  will  not  be  appointed. ^"^  If, 
however,  the  court  sees  its  way  to  a  dissolution  at  the  hearing,  there 
is  a  case  for  a  receiver.^"* 
Recewer  not  Ordered  in  Every  Case  Where  a  Case  for  Dissolution  i» 

Made. 

The  court  will  not,  as  a  matter  of  course,  appoint  a  receiver  of 
the  partnership  assets  even  where  a  case  for  dissolution  is  made.^"' 
The  very  basis  of  a  partnership  contract  being  the  mutual  confidence 

200  Hall  T.  Hall,  3  Macn.  &  G.  89. 

201  Sheppard  v.  Oxeuford,  1  Kay  &  J.  491;  Hubbard  v.  Curtis,  8  Clarke  (Iowa) 
I;  Saylor  v.  Mockbie,  9  With.  (Iowa)  209;  Evans  v.  Coventry,  5  De  Gex,  M.  & 
G.  911. 

202  Goodman  v.  Whitcomb,  1  Jac  &  W.  589;  Roberts  v.  Kberhardt,  Kay,  148; 
Smith  V.  Jeyes,  4  Beav.  503. 

203  Baxter  v.  West,  28  Law  J.  Ch.  169. 

204  Marsden  v.  Kaye,  80  Law  T.  197;  Gowan  v.  Jeflries,  2  Ashm.  296.  If  the 
case  made  stands  in  such  a  state  that  the  court  cannot  see  whether  or  not  there 
shall  be  a  decree  for  dissolution  at  the  hearing,  it  will  not  take  into  its  own  hands 
the  conduct  of  a  partnership,  although  it  may  be  dissolved.  Goodman  v.  Whit- 
comb, 1  Jac.  &  W.  592.  See,  also,  as  to  appointment  on  interlocutory  application, 
Baxter  v.  West,  28  Law  J.  Ch.  169;  at  the  hearing,  Id.,  1  Drew  &  G.  17o,  175; 
Waters  v.  Taylor,  15  Ves.  25;  Bailey  v.  Ford,  13  Sim.  495;  Bowker  v.  Henry,  6 
Law  T.  (N.  S.)  43. 

205  Harding  v.  Glover,  18  Ves.  281;  Fairburn  v.  Pearson,  2  Macn.  &  G.  145; 
Slemmer's  Appeal,  58  Fa.  St.  168;  Waters  v.  Taylor,  15  Ves.  10;  Cox  v.  Peters, 
13  N.  J.  Eq.  39;  Renton  v.  Chaplain,  9  N.  J.  Eq.  62;  Quinlivan  v.  English,  44 
.Mo.  46. 


§    -146)  RECEIVEKS.  355 

reposed  in  each  otlier  by  the  parties,^"*  the  court  will  not  appoint 
a  receiver  in  a  suit  between  members  of  the  partnership  firm  unless 
8ome  special  ground  for  its  interference  be  established.^"^  It  must 
appear  that  the  member  of  the  firm  against  whom  the  appointment 
of  a  receiver  is  sought  has  done  acts  which  are  inconsistent  with  the 
duty  of  a  partner,  and  are  of  a  nature  to  destroy  the  mutual  con- 
fidence which  ought  to  subsist  between  the  parties.'*" 

2  06  Philips  V.  Atkinson,  2  Brown,  Ch.  272.  See  Peacock  ▼.  Peacock,  16  Vea. 
51;  Sieghortner  v.  Weissenboru,  20  N.  J.  Eq.  172;  Garretson  v.  Weaver,  3  Edw. 
Ch.  (N.  Y.)  385. 

2  07  Harding  v.  Glover,  18  Ves.  281.  See,  also,  Slemmer's  Appeal,  58  Pa.  St. 
168;  Tomlinson  v.  Ward,  2  Conn.  390;  Terrell  v.  Goddard,  18  Ga.  664;  Parkhurat 
V,  Muir,  7  N.  J.  Eq.  307. 

208  Kerr,  Rec.  p.  90;  Smith  t.  Jeyes,  4  Beav.  505;  Peacock  v.  Peacock,  16 
Ves.  51;  Chapman  v.  Beach,  1  Jac.  &  W.  594,  note.  In  Williamson  v.  Wilson,  1 
Bland  (Md.)  418,  426,  the  court  said:  "These  parties  admit  themselves  to  be 
insolvent  debtors.  The  plaintiflE  charges  his  co-partners,  the  defendants,  with  a 
design  to  waste  the  joint  property  and  ppply  it  to  their  own  use.  The  defendants 
deny  these  allegations,  and  charge  the  plaiutiff  with  a  design  to  misapply  the 
funds,  and  to  give  some  of  the  creditors  an  undue  preference.  Taking  the  charges 
of  the  plaintiff  and  of  the  defendants,  or  of  either  party,  to  be  true,  or  allow  that 
each,  or  either  party,  was  about  to  waste  the  property,  or  has  his  favorite  cred- 
itors, to  whom  it  is  his  design  to  give  an  undue  preference,  and  it  is  clear  that 
one,  or  the  other,  or  both  of  them,  liave  formed  a  fixed  resolution  to  violate  one 
of  the  great  principles  of  equity,  which  it  is  the  peculiar  province  of  this  court  to 
prevent.  None  of  the  creditors  of  these  insolvent  debtors,  so  far  as  it  appears, 
have  as  yet  obtained  any  legal  advantage.  It  is  proper,  therefore,  that  this  court 
should  now  lay  its  hands  upon  the  joint  property  of  this  partnership,  and  let  all 
its  creditors  come  in  pari  passu,  and  according  as  their  respective  priorities,  if 
any,  should  appear.  Both  parties  profess  to  have  had  this  equitable  distribution 
in  contemplation.  Both  acknowledge  themselves  to  be  in  that  insolvent  condition 
in  which  the  making  of  such  an  equitable  distribution  has  devolved  upon  them 
as  a  duty.  And  yet  each  charges  the  other  with  having  made  an  effort  and  formed 
a  fixed  design  to  disregard  this  duty.  Neither  of  them  seems  to  have  the  least 
confidence  in  the  other.  Under  all  these  circumstances,  I  consider  this  as  a  case 
in  which  it  is  peculiarly  fit  and  proper  that  a  receiver  should  have  been  appointed 
before  answer,  and  should  now  be  continued  as  a  means  of  winding  up  the  affairs 
of  this  partnership  in  safety,  and  with  justice  and  equality  to  all  concerned."  A 
dissolution  of  a  partnership  may  be  granted,  and  a  receiver  appointed,  on  account 
of  the  gross  misconduct  of  one  or  more  of  the  parties.  To  authorize  the  appoint- 
ment of  a  receiver  there  must  be  some  breach  of  the  duty  of  the  partner  or  the 
contract  of  partnership.  New  v.  Wright,  44  Miss.  202.  See,  also.  Marble  Co.  v. 
Ripley,  10  Wall.  339;   Drew  v.  Beard,  107  Mass.  64;    WUson  v.  Fitchter.  11  N.  J, 


356  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

Death  or  Bankruptcy  of  One  Member  of  a  Firm  not  a  Ground  for  a 

Receiver. 

The  death  or  bankruptcy  of  one  of  the  members  of  a  firm  is  not 
of  itself  a  ground  for  the  appointment  of  a  receiver  as  against  the 
surviving  or  solvent  partner  or  pai'tners.     The  mutual  confidence 

Eq.  71;  Shannon  v.  Wright,  60  Md.  520;  Cox  v.  Volkert,  86  Mo.  505;  Stockdale  v. 
Ullery,  37  Pa.  St.  486;  Fairthorne  v.  Weston,  3  Hare,  387.  Upon  a  bill  between 
partners  for  closing  the  affairs  of  a  partnership  after  the  dissolution  of  the 
firm,  the  insolvency  of  the  defendant  will  entitle  the  complainant  to  the  appoint- 
ment of  a  receiver  and  an  injunction.  Randall  v.  Morrell,  17  N.  J.  Eq.  343.  In 
this  case  the  court  said  (page  346):  "In  the  courts  of  New  York  and  elsewhere 
it  has  been  adopted  as  an  established  rule  that,  on  a  bill  for  closmg  the  affairs 
of  a  partnership,  when  it  is  admitted  that  the  firm  has  been  dissolved,  the  ap- 
pointment of  a  receiver  follows  as  a  matter  of  course.  [Citing  Law  v.  Ford,  2 
Paige  (N.  Y.)  310;  Marten  v.  Van  Schaick,  4  Paige  (N,  Y.)  479.J  It  is  true  that 
this  course  of  decision  has  not  been  followed  with  exact  conformity  in  this  state, 
but  the  principle  has  been  adopted,  subject  to  the  important  qualification  that, 
even  after  a  dissolution,  a  receiver  will  be  appointed  only  when  it  appears  neces- 
sary to  protect  the  interests  of  the  parties.  The  rule  in  this  restricted  (and,  as 
it  seems  to  me,  highly  reasonable)  form,  will  be  found  propounded  and  is  elucidated 
in  the  cases  of  Kenton  v.  Chaplain,  9  N.  J.  Eq.  62;  Birdsall  v.  Colie,  10  N.  J.  Eq. 
63;  Cox  V.  Peters,  13  N.  J.  Eq.  41.  But  that  the  circumstance  of  the  insolvency 
of  one  of  the  partners,  in  addition  to  the  fact  of  the  dissolution  of  the  firm,  would, 
under  ordinary  circumstances,  induce  this  court  to  assume  the  administration  of 
the  partnership  affairs,  I  think,  admits  of  no  doubt;  and  it  seems  equally  clear 
that,  when  the  court  proceeds  on  this  consideration,  an  injunction  is  an  almost 
indispensable  auxiliary  to  a  receiver.  The  insecurity  of  the  assets  if  left  under  the 
power  of  an  insolvent  member  of  a  dissolved  firm,  is  the  motive,  in  such  case, 
upon  which  the  judicial  action  is  based;  and  it  applies  with  equal  force  to  the 
allowance  of  an  injunction  as  to  the  appointment  of  a  receiver.  It  is  only  by  the 
united  efficacy  of  these  two  safeguards  that,  when  msolvency  supervenes,  the 
assets  of  the  co-partnership  can  be  secured  and  preserved  for  the  benefit  of  those 
to  whom  they  equitably  belong,"  In  Wilson  v.  Fitchter,  11  N.  J.  Eq.  71,  the 
court  said:  "Because  one  partner  filing  a  bill  may  be  entitled,  as  of  course,  to  a 
decree  for  dissolution,  and  for  an  injunction,  so  far  as  to  prevent  the  other  partner 
from  carrying  on  business  in  the  partnership  name,  and  on  the  credit  of  the 
partnership,  it  does  not  follow,  of  course,  that  a  receiver  is  to  be  appointed.  That 
is  a  matter  somewhat  in  the  discretion  of  the  court.  It  is  true,  in  Law  v.  Ford, 
2  Paige  (N.  Y.)  310,  and  in  Marten  v.  Van  Schaick,  4  Paige  (N.  Y.)  479,  the 
chancellor  states  it  to  be  a  matter  of  course.  But  I  have  had  occasion  before  to 
approve  what  was  said  by  Lord  Eldon  in  Harding  v.  Glover,  18  Ves.  281,  disavow- 
ing, as  a  principle  of  this  court,  that  a  receiver  is  to  be  appointed  merely  on  the 
ground  of  a  dissolution  of  partnership.     There  must  be  some  breach  of  the  duty 


§    146)  BECEIVEEUB.  357 

which  the  members  of  the  firm  reposed  in  each  other  at  the  date 
of  the  contract,  and  which  formed  the  very  basis  of  the  partnership 
contract,  is  not,  as  regards  the  surviving  or  solvent  partner  or  part- 
ners, affected  by  the  death  or  insolvency  of  one  of  the  members 
of  the  firm.-"*  If  a  partner  dies  or  becomes  bankrupt,  a  right  to 
wind  up  the  partnership  concern,  and  collect  the  assets,  is  by  law 
vested  in  the  surviving  ^^^  or  solvent  ^^^  partner  or  partners,  as  the 
case  may  be.  Before  the  court  will  interfere  and  appoint  a  receiver, 
some  breach  or  neglect  of  duty  on  their  part  must  be  established.^^* 

of  a  partner,  or  of  the  contract  of  partnership,  to  justify  such  appointment.  •  •  • 
Where  the  answer  denies  the  partnership,  the  court  will  not  interfere  with  the 
property  in  dispute."  Where  a  partnership  is  not  determinable  at  will,  and  the 
court  is  resorted  to  for  the  purpose,  a  receiver  will  be  appointed  of  course.  The 
reason  is  that  whatever  justifies  the  court  in  decreeing  a  dissolution  estabhshes 
the  propriety  of  appointing  a  receiver.  But  where  a  partnership  is  dissolved  by 
mutual  consent,  or  determined  by  the  will  of  either  party,  the  appointment  of  a 
receiver  is  not  a  matter  of  course.  "Many  a  solvent  partnership  would  terminate 
in  insolvency  if  its  affairs  were  suddenly  committed  to  the  hands  of  a  stranger.'' 
Birdsall  v.  Colie,  10  N.  J.  Eq.  63,  65.  "A  receiver  of  a  partnership  may  be  ap- 
pointed, pending  a  suit  for  dissolution,  where  it  appears  that  complainant  is 
probably  entitled  to  the  dissolution,  and  the  partners  cannot  agree  among  them- 
selves as  to  the  disposition  and  control  of  the  firm  property."  Fetter,  Eq.  p.  332; 
McElvey  v.  Lewis,  76  N.  Y,  373;  Jordan  v.  Miller,  75  Va.  442;  New  v.  Wright, 
44  Miss.  202;  Allen  v.  Hawley,  6  Fla.  164;  Barnes  v.  Jones,  91  Ind.  161.  In 
O'Bryan  v.  Gibbons,  2  Md.  Ch.  9,  it  was  held  that,  where  a  partnership  still 
subsists,  to  authorize  either  party  to  apply  for  an  injunction,  and  for  the  appoint- 
ment of  a  receiver,  he  must  be  prepared  to  show  a  case  of  great  abuse  or  strong 
misconduct,  and  the  query  was  suggested  that  the  bill  should  likewise  ask  for 
dissolution.  After  dissolution,  it  was  said  that  the  objection  to  an  injunction  and 
the  appointment  of  a  receiver  was  not  so  strong,  but  that,  to  induce  the  court  to 
act,  some  urgent  and  pressing  necessity  must  be  shown.  See,  to  same  effect,  Drury 
v.  Roberts,  2  Md.  Ch.  157;  Heflebower  v.  Buck,  64  Md.  15,  20  Atl.  991;  Morey 
v.  Grant,  48  Mich.  326,  12  N.  W.  202. 

209  See  Philips  v.  Atkinson,  2  Brown,  Ch.  272. 

210  Collins  V.  Young,  1  Macq.  385.  See  Philips  v.  Atkinson,  2  Brown,  Ch 
272.     See,  also,  post,  p.  408. 

211  Freeland  v.  Stansfeld,  2  Smale  &  GifE.  479,  487;  Fraser  v.  Kershaw,  2 
Kay  &  J.  496,  499.    See,  also,  post,  p.  410. 

2"  Collins  V.  Young,  1  Macq.  385;  Horrell  v.  Witts,  L.  R.  1  Prob.  &  Div.  103; 
Renton  v.  Chaplain,  9  N.  J.  Eq  62;  Walker  v.  House,  4  Md.  Ch.  39,  45;  Hamill 
V.  Hamill,  27  Md.  679.  "It  is  consequently  a  matter  of  course  to  appoint  a 
receiver  when  all  tke  partners  are  dead  and  a  suit  is  pending  between  their  rep- 


358  ACTIONS    BETWEEN    PARTNERS.  (Ch.   7 

Misconduct  of  Partner  a  Ground  for  a  Receiver. 

The  ground  on  which  the  court  is  most  commonly  asked  to  ap- 
point a  receiver  is  where,  by  the  misconduct  of  a  partner,  his  right 
of  personal  intervention  in  the  partnership  affairs  has  been  forfeited, 
and  the  partnership  funds  are  in  danger  of  being  lost.  Mere  quar- 
rels and  disagreements  between  the  partners,  arising  from  infirmi- 
ties of  temper,  are  not  a  sufficient  ground  for  the  interference  of  the 
court.^^'  The  due  winding  up  of  the  affairs  of  the  concern  must  be 
endangered  to  induce  the  court  to  appoint  a  receiver.^^*  The  non- 
co-operation  of  one  partner,  whereby  the  whole  responsibility  of 
management  is  thrown  on  his  co-partner,  is  not  sufficient.""  Where, 
however,  a  partner  has  so  misconducted  himself  as  to  show  that 

resentatives."  Kerr,  Rec.  p.  94;  Philips  v.  Atkinson,  2  Brown,  Ch.  272.  So, 
also,  when  such  appointment  is  sought  by  a  partner  against  the  representatives 
or  assignees  in  bankruptcy  of  his  late  co-partner.  Freeland  v.  Stansfeld,  16  Jur. 
792,  2  Smale  &  GifE.  479.  See,  also,  Fraser  v.  Kershaw,  2  Kay  &  J.  49(5. 
Where  there  is  an  unreasonable  delay  on  the  part  of  the  surviving  partners  in 
closing  the  afifairs  of  the  partnership,  or  if  they  are  wasting  the  partnership 
assets,  a  receiver  will  be  appointed,  on  the  application  of  the  administrator  of 
the  deceased  partner.  Miller  v.  Jones,  39  111.  54.  See,  also,  Holden's  Adm'rs 
V.  M'Makin,  1  Pars.  Eq.  Cas.  (Pa.)  270;  Shannon  v.  Wright,  60  Md.  520. 
W'hen  one  partner,  who  is  insolvent,  or  in  failing  circumstances,  without  the 
consent  and  against  the  will  of  the  other  partner,  is  disposing  of  the  effects  of 
the  partnership,  and  appropriating  them  to  his  own  use,  the  other  has  a  right  to 
an  injunction,  and  to  have  a  receiver  appointed.  Phillips  v.  Trezevant,  67  N. 
C.  370.  After  dissolution  of  the  firm,  whether  by  mutual  agreement  or  by  the 
death  of  one  of  its  members,  a  receiver  will  be  appointed,  where  it  appears  that 
the  partners  in  possession  are  misconducting  themselves,  or  that  the  assets  are 
in  peril.  Word  v.  Word,  90  Ala.  81,  7  South.  412;  Buskin  v.  Boyce,  104  Ind. 
.53,  3  N.  E.  G15;   Davis  v.  Grove,  2  Rob.  (N.  Y.)  134,  635. 

218  Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  .593;  Marshall  v.  Colman,  2  Jac. 
■&  W.  266;  Smith  v.  Jeyes,  4  Beav.  503,  504;  McElvey  v.  Lewis,  76  N.  Y.  373; 
Henn  v.  Walsh,  2  Edw.  Ch.  (N.  Y.)  129;  Sloan  v.  Moore,  37  Pa.  St.  217;  Loomis 
v.  McKenzie,  31  Iowa,  425.      And  see  Kennedy  v.  Kennedy,  3  Dana  (Ky.)  239. 

21*  Goodman  v.  W^hitcomb,  1  Jac.  &  W.  589,  593;  Smith  v.  Jeyes,  4  Beav. 
503,  505.  Where  each  partner  attempts  separately  to  make  an  assignment  of 
the  partnership  assets  for  the  benefit  of  creditors  to  separate  assignees,  each  of 
whom  notifies  the  firm  debtors  not  to  pay  the  amount  owing  the  firm  to  the 
other,  the  appointment  of  a  receiver  for  the  partnership  is  proper.  Fox  v.  Curtis, 
176  Pa.  St.  52,  34  Atl.  952. 

21 B  Roberts  v.  Eberhardt,  Kay,  148;  Rowe  v.  Wood,  2  Jac.  &  W.  556;  Smith 
▼.  Lowe,  1  Edw.  Ch.  33. 


§    146)  EECEIVEBS,  359 

he  is  no  longer  to  be  trusted, — as,  for  example,  if  one  partner  col- 
ludes with  the  debtors  of  the  firm,  and  allows  them  to  delay  paying 
their  debts,^^®  or  is  carrying  on  a  separate  trade  on  his  own  ac- 
count with  the  partnership  property;  ^^^  or  if  a  surviving  partner 
insists  on  carrying  on  the  business,  and  employing  therein  the  as- 
sets of  his  deceased  partner;  ^^^  or  where,  the  partnership  property 
being  abroad,  one  of  the  partners  goes  off  in  order  to  do  what  he 
likes  with  it;''^^  or  if  the  persons  having  the  control  of  the  part- 
nership assets  have  already  made  away  with  some  of  them;^^° 
or  if  there  has  been  such  mismanagement  as  to  endanger  the  whole 
concern;  ^^^  or  if  one  of  the  partners  has  acted  in  a  manner  incon 
sistent  with  the  duties  and  obligations  which  are  implied  in  every 
partnership  contract,'^^^ — in  all  such  cases  a  receiver  will  be  ap 
pointed. 

The  unwillingness  of  the  court  to  appoint  a  receiver  at  the  suit 
of  one  member  of  a  firm  against  another  being  based  on  the  con- 
fidence originally  reposed  in  each  other  by  the  parties,  the  ground  of 
the  rule  has  no  longer  any  place  if  it  appear  that  the  confidence 
has  been  misplaced.^ ^•''  Where,  accordingly,  a  defendant,  by  false 
and  fraudulent  representations,  induced  the  plaintiff  to  enter  into 
partnership  with  him,  and  the  plaintiff  soon  afterwards,  on  discov- 
ering the  fraud,  filed  a  bill  praying  that  the  partnership  might  be 
declared  void,  and  for  a  receiver,  the  court,  on  motion,  ordered  that 
a  receiver  should  be  appointed.^^* 

There  is  a  case  for  a  receiver,  even  although  there  be  no  miscon- 
duct endangering  the  partnership  assets,  if  one  partner  excludes 

2i«  Estwick  T.  Conningsby,  1  Vern.  118. 

217  Harding  v.  Glover,  18  Ves.  281. 

218  Madgwick  v.  Wimble,  6  Beav.  495.  See  Crawshay  v.  Maule,  1  Swanst.  507; 
Miller  v.  Jones,  39  111.  54;  Holden's  Adm'rs  v.  McMakin,  1  Pars.  Eq.  Uas,  (Pa.)  270. 

219  Sheppard  v.  Oxenford,  1  Kay  &  J.  491. 

220  Evans  v.  Coventry,  5  De  Gex,  M.  &  G.  911. 

2  21  See  De  Tastet  v.  Bordicu,  cited  2  Brown,  Ch.  272;  Jefferys  v.  Smith,  1  Jac. 
&  W.  298;   Hall  v.  Hall,  3  Macn.  &  G.  79. 

22  2  Smith  V.  Jeyes,  4  Beav.  505;  Say  lor  v.  Mockbie.  9  Withr.  (Iowa)  209.  See, 
generally,  Boyce  v.  Burchard,  21  Ga.  74;  Sutro  v.  Wagner,  23  N.  J.  Eq.  388; 
Evans  v.  Evans,  9  Paige  (N.  Y.)  178;  Jacquin  v.  Buisson,  11  How.  Prac.  (N.  Y.) 
385;   Haight  v.  Burr,  19  Md.  130;   Maher  v.  Bull,  44  111.  97. 

228  See  Chapman  v.  Beach,  1  Jac.  &  W.  594,  note;  Smith  t.  Jeyes,  4  Beav.  503. 

124  Ex  parte  Broome,  1  Rose,  69. 


360  ACTIONS    BETWEEN   PARTNERS.  (Ch.  7 

another  partner  from  the  management  of  the  partnership  affairs. ""^ 
This  doctrine  is  acted  on  where  the  defendant  contends  that  the 
plaintiff  is  not  a  partner,^^^  or  that  he  has  no  interest  in  the  part- 
nership assets.  In  Hale  v.  Hale,^^^  where  the  defendant  sought 
to  exclude  the  plaintiff  from  all  interest  in  the  partnership  assets, 
and  relied  on  illegality  as  a  defense  to  the  suit,  a  receiver  was  ap- 
pointed. In  that  case  the  plaintiff  and  defendant  had  carried  on 
the  business  of  brewers  for  many  years  in  partnership  together. 
The  plaintiff  filed  a  bill  for  a  dissolution,  and  the  defendant  then 
denied  the  plaintiff's  right  to  any  account  or  relief  whatever,  on 
the  ground  that  he,  being  a  spiritual  person,  was  not  competent  by 
law  to  engage  in  any  trading  concern,  and  claimed  the  whole  prop- 
erty himself.  A  receiver  and  manager  was  appointed  on  the  ground 
that  the  defendant  insisted  on  a  legal  objection,  as  destroying  all 
right  of  his  co-partner  to  a  share  in  the  profits,  although  the  plain- 
tiff was  only  a  dormant  partner,  and  the  defendant's  management 
of  the  business  was  in  no  way  complained  of.^^® 

Inasmuch  as  the  court  will  not  appoint  a  receiver  against  a  part- 
ner unless  some  special  ground  for  doing  so  can  be  shown,  it  fol 
lows  that  in  a  firm  of  several  members  there  is  more  difficulty  in 
obtaining  a  receiver  than  in  a  firm  of  two.  For  the  appointment  of 
a  receiver  operating  in  fact  as  an  injunction  against  the  members, 

228  Wilson  V.  Greenwood,  1  Swanst.  481;  Goodman  v.  Whitcomb,  1  Jac.  &  W. 
592;  Rowe  v.  Wood,  2  Jac.  &  W.  558;  Const  v.  Harris,  Txirn.  &  K.  525;  Katz  v. 
Brewington,  71  Md.  79,  20  Atl.  139  (cf.  Kershaw  v.  Mattliews,  2  Russ.  G2);  Hot- 
tenstein  v.  Conrad,  9  Kan.  435;  Shulte  v.  Hoffman,  18  Tex.  678;  Barnes  v.  Jones, 
91  Ind.  161;  Heathcot  v.  Ravenscroft,  6  N.  J.  Eq.  113.  In  Maynard  v.  Railey,  2 
Nev.  313,  it  was  held  that  a  receiver  would  be  appointed  where  one  partner  ex- 
eludes  his  co-partner  from  the  participation  in  the  affairs  of  the  partnership,  or 
when  both  partners  have  assigned  their  respective  interests,  and  the  assignees  can- 
not agree.  In  Marten  v.  Van  Schaick,  4  Paige,  479,  Chancellor  Walworth  says: 
"Each  partner  has  an  equal  right  in  this  case  to  the  possession  and  control  of  the 
partnership  effects  in  business,  and,  if  they  cannot  agree  among  themselves,  it  is  a 
matter  of  course  to  appoint  a  receiver,  upon  a  bill  filed  to  close  the  partnership  con- 
cerns, on  the  application  of  either  party."  See,  also,  Van  Rensselaer  v.  Emery,  9 
How.  Prac.  135;  McElvey  v.  Lewis,  76  N.  Y.  373;  Richards  v.  Baurman,  65  N.  C. 
162;    Sloan  v.  Moore,  37  Pa.  St.  217. 

2  26  Peacock  v.  Peacock,  16  Ves.  49;  Blakeney  v.  Dufaur,  15  Beav.  40. 

2  27  4  Beav.  369. 

22  8  See,  also,  Sheppard  v.  Oxenford,  1  Kay  &  J.  491,  492,  where  a  receiver  was 
appointed  although  the  legality  of  the  partnership  was  denied. 


§    146)  RECEIVERS.  861 

there  must  be  some  ground  for  excluding  all  who  oppose  the  appli- 
cation. If  the  object  is  to  exclude  some  or  one  only  from  intermed- 
dling, the  appropriate  remedy  is  rather  by  injunction  than  by  a  re- 
ceiver.'** 

Course  of  Court    Where  the  Partnership  is  Denied. 

WTiere  a  partnership  is  alleged  on  the  one  side,  and  denied  on  the 
other,  and  a  motion  is  made  for  a  receiver,  the  court,  if  it  directs 
an  issue  as  to  partnership  or  no  partnership,  usually  declines  to  ap- 
point a  receiver  until  that  question  is  determined.''^'* 

Recei/ver  Appointed   Where  Partners  have^  hy  Agreement,  Di/vested 

Themsehes  of  the  Right  of  Winding   Up. 

Another  case  in  which  the  court  may  be  called  upon  to  appoint 
a  receiver  is  where  the  partners  have,  by  agreement,  divested  them- 
selves more  or  less  of  their  right  to  wind  up  the  affairs  of  the  con- 
cern. In  Davis  v.  Amer,^^^  for  instance,  the  plaintiff  and  defend- 
ant, on  dissolving  partnership,  appointed  a  third  person  to  get  in 
the  assets  of  the  partnership,  and  agreed  not  to  interfere  with  him. 
After  the  agreement  had  been  partially  acted  on,  one  of  the  partners 
died;  and,  disputes  arising  between  the  executors  of  the  deceased 
partner  and  the  surviving  partner,  1;he  latter  got  in  some  of  the  debts 
of  the  firm,  in  violation  of  the  agreement.  On  a  bill  filed  by  the 
executors  of  the  deceased  partner  for  an  injunction  and  a  receiver, 
the  court,  on  motion,  appointed  a  receiver,  but  declined  to  grant 
an  injunction,  on  the  ground  that  there  was  no  sufficient  impropriety 
of  conduct  on  the  part  of  the  defendant  to  render  such  an  order 
necessary.*'"' 

228  Kerr,  Rec.  98;   Hall  v.  Hall,  3  Macn.  «&  G.  79. 

280  Kerr,  Rec.  p.  98;  Peacock  v.  Peacock,  16  Ves.  49;  Chapman  ▼.  Beach,  1 
Jac.  &  W.  594,  note;  Fairburn  v.  Pearson,  2  Macn.  &  G.  144;  Norway  v.  Rowe,  19 
Ves.  144;  Baxter  v.  Buchanan,  3  Brewst.  (Pa.)  435;  Hobart  v.  Ballard,  31  Iowa, 
521;  Guyton  v.  Flack,  7  Md.  398;  Speights  v.  Peters,  9  Gill  (Md.)  472.  A  receiver 
will  not  be  appointed  in  a  proceeding  to  dissolve  a  partnership  where  the  partner- 
ship is  denied,  unless  the  court  is  satisfied  that  there  is  in  fact  a  partnership  be- 
tween the  parties,  or  that  the  fund  is  in  danger.  McCarty  v.  StanwLs,  16  Misc. 
Rep.  132,  38  N.  Y.  Supp.  820. 

2313  Drew.  64. 

282  Kerr,  Rec.  p.  99.  See,  also.  Turner  v.  Major,  3  Giff.  442.  When  both  part- 
ners have  assigned  their  respective  interests,  and  the  assignees  cannot  agree,  a  re- 
ceiver will  be  appointed.     Maynard  v.  Railey,  2  Nev.  313. 


362  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Gh.   b 

CHAPTER  Vm. 

ACTIONS   BETWEEN   PARTNERS  AND  THIRD   PERSONS. 

147.  in  General. 

148.  Parties  to  Action  on  Firm  Claim, 

149.  Claims  Arising  ex  Contractu. 

150.  Contracts  in  Firm  Name. 

151.  Contracts  in  Name  of  Partner. 

152.  Claims  Arising  ex  Delicto. 

153.  Parties  to  Action  on  Firm  Liability. 

154.  Liabilities  Arising  ex  Contractu. 

155.  Liabilities  Arising  ex  Delicto. 

156.  Effect  of  Changes  in  Firm. 
157--159.  Admission  of  New  Member. 
160-162.  Retirement  of  Old  Member. 

163.  Death  of  Member. 

164-167.  Bankruptcy  and  Insolvency. 

168.  Disqualification  of  One  Partner  to  Sua. 

169.  Action  in  Firm  Name. 

IN  GENERAL. 

147.  Actions  between  partners  and  third  persons   are  in 

the  main  governed  by  ordinary  principles.  The 
chief  peculiarities  relate 

(a)  To  parties,  and 

(b)  To  actions  where  one  partner  is  disqualified  to  sue. 

PARTIES  TO  ACTION  ON  FIRM  CLAIM. 

148.  It  is  a  general  rule  that  all  partners  must  join  as  par- 

ties plaintiff  in  an  action  to  enforce  a  partnership 
claim.  This  will  be  considered  under  the  following 
heads : 

(a)  Claims  arising  ex  contractu  (p.  363). 

(b)  Claims  arising  ex  delicto  (p.  371). 


§    150)  CONTRACTS    IN    FIRM    NAME.  363 


SAME— CLAIMS  ARISING  EX  CONTRACTU. 

149.  The  question  as  to  parties  plaintiff  in  actions  on  part- 

nership claims  arising  ex  contractu  arises  in  two 
classes  of  cases : 

(a)  Where  the  contract  was  made   in  the   name   of  the 

firm  (p.  363),  and 

(b)  Where  the  contract  w^as  made  in   the  name    of  one 

partner  on  behalf  of  the  firm  (p.  365). 

150.  CONTRACTS  IN  FIRM   NAME— Actions   upon   con- 

tracts made  in  the  firm  name  must  be  brought  in 
name  of  all  the  persons  who  were  actual  partners 
at  the  time  the  contract  w^as  made,  except 

EXCEPTIONS — (a)  Dormant  partners  are  proper  but  not 
necessary  parties  (p.  363). 

(b)  Nominal  partners  need  not  be  made  parties  unless 
expressly  named  in  the  contract  (p.  364). 

It  has  been  seen  that  the  firm,  as  an  entity,  does  not  exist  in  con- 
templation of  law,  and  that  the  firm  name  is  merely  a  convenient 
symbol  to  indicate  all  the  partners  jointly.^  A  contract  made  in  the 
partnership  name  is,  therefore,  a  contract  made  with  all  the  part- 
ners jointly,  and  it  is  familiar  law  that  in  such  a  case,  all  the  persons 
with  whom  the  contract  was  made  must  join  in  an  action  to  enforce 
it*  The  effect  of  changes  in  the  firm,  as  by  the  admission  of  a  new 
member,  or  the  retirement  of  an  old  one,  will  be  considered  here- 
after.' 
Dormant  Partners. 

In  partnership  transactions,  dormant  partners  occupy  the  position 
of  undisclosed  principals.     They  may,  therefore,  join  as  plaintiffs  in 

1  See  ante,  p.  98. 

2  Seely  v.  Schenek,  2  N.  J.  Law,  71;  Reed  v.  Railroad  Co.,  105  Mass.  303;  Cho- 
teau  V.  Raitt,  20  Ohio,  132;  Vinal  v.  Land  Co.,  110  U.  S.  215,  4  Sup.  Ct.  4;  Cush- 
ing  V.  Marston,  12  Cush.  Mass.  431;  Moore  v.  Burns,  60  Ala.  269;  Fish  v.  Gates, 
133  Mass.  441.  As  partners  cannot  be  sued  otherwise  than  in  their  individual 
names,  the  allegation  of  a  partnership  name  need  not  be  proven,  but  may  be  re- 
garded as  surplusage.     Courson  v.  Parker,  39  W.  Va.  521,  20  S.  E.  5S3. 

3  See  post,  p.  378. 


364  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.   8 

an  action  on  a  contract  entered  into  on  behaJf  of  the  firm  of  which 
they  are  members.  But  dormant  partners  never  need  be  joined  as 
plaintiffs  in  such  an  action.  The  action  may  be  brought  by  the  os- 
tensible  partners  alone,  for  they  are  the  persons  with  whom  the  con- 
tract was  expressly  made.  In  other  words,  dormant  partners  are 
proper,  but  not  necessary,  parties.* 

Wominal  Partners. 

A  nominal  partner  is  a  person  who  appears  to  be  a  partner,  but  is 
not  so.  He  sometimes  must,  and  sometimes  need  not,  join  in  an  ac- 
tion on  a  contract  made  with  the  firm.' 

First.  If  a  contract  is  made  expressly  with  a  real  and  with  a 
nominal  partner,  they  must  join  in  suing  on  it.*  Thus,  if  a  nominal 
partner's  name  is  on  a  bill  of  exchange  or  promissory  note,  he  must 
be  a  party  to  the  action  brought  upon  it;  and  the  same  rule  applies 
to  actions  on  contracts  under  seal.'' 

Secondly.  Prima  facie,  a  nominal  partner  ought  to  join  in  suing 
on  any  contract,  whether  express  or  implied,  made  with  the  firm; 
for  an  agreement  with  the  firm  is,  prima  facie,  an  agreement  with 
the  persons  who  apparently  make  up  the  firm.  But,  if  it  be  dis- 
tinctly shown  that  a  person  who  is  apparently  the  member  of  a  firm 
is  in  reality  not  so, — i.  e.  tliat  he  is  merely  a  nominal  partner,— a 
contract  made  with  the  firm  is  not  in  reality  made  with  him,  and  he 
need  not  join  in  suing  upon  it.^ 

Thirdly.  It  is  an  open  question  whether  a  mminal  partner  can 
join  in  cases  in  which  it  has  been  established  that  there  is  no  ne- 
cessity for  his  joining.  As  a  misjoinder  is  a  much  less  serious  error 
than  a  nonjoinder  of  plaintiffs,  a  nominal  partner  should,  as  a  mat- 
ter of  prudence,  join  in  all  actions  on  contracts  made  with  the  firm.® 

*  Wood  V.  O'Kelley,  8  Cush.  (Mass.)  406;  Hilliker  v.  Loop,  5  Vt.  116;  Piatt 
V.  Halen,  23  Wend.  (N.  Y.)  456;  Wilson  v.  Wallace,  8  Serg.  &  R.  (Pa.)  53; 
Desha  v.  Holland,  12  Ala.  513;  Monroe  v.  Ezzell,  11  Ala.  603.  See  Seymour  v. 
Railroad  Co.,  106  U.  S.  320,  1  Sup.  Ct.  123;  Secor  v.  Keller,  4  Duer  (N.  Y.)  416; 
Howe  V.  Savory,  51  N.  Y.  631,  49  Barb.  (N.  Y.)  403. 

B  Dicey,   Parties,   p.   172. 

6  Guidon  v.  Robson,  2  Camp.  302.     Cf.  Teed  v.  Elworthy,  14  Bast,  210. 
T  Guidon  v.   Robson,  2  Camp,  302. 

«  Cf.  Teed  v.  Elworthy,  14  East,  210,  with  Kell  v.  Nainby,  10  Bam.  &  O.  20. 
See  Bates,  Partn.  §  1023. 

•  Dicey,  Parties,  p.  172.     See,  in  affirmative,  Colly.  Partn.  467.     See,  In  nega- 


§  151)  CONTRACTS  IN  NAME  OF  PARTNER.  365 

151.  CONTRACTS  IN  NAME  OF  PARTNER— Actions   on 
contracts  made  in  the  name  of  one  partner,  but  on 
behalf  of  the   firm,   must  be  brought  by    all   the 
members  jointly  -who  composed  the  firm  at  the  time 
the  contract  -was  made,  except 
EXCEPTIONS— (a)   In   the    following    cases    the    action 
must  be  brought  in  the  name  of  the  contract- 
ing partner  alone: 

(1)  Where  the  contract  is  under  seal  (p.  366). 

(2)  Where  the  contract  is  a  negotiable  instrument 

(p.  366). 

(3)  Where  the  right  to  sue  on  the  contract  is  by  the 

terms  or  circumstances  of  it  expressly  restrict- 
ed to  the  partner  with  whom  it  is  made  (p.  367). 

(b)  In  the  following  cases  the    action  may   be  brought 

either  in  the  name  of  all  the  partners,  or  in 
the  name  of  the  partner  in  whose  name  it 
w^as  made: 

(1)  Where   the  contract  is  made   with  the  partner 

personally,  as  well  as  with  him  on  behalf  of 
the  firm  (p.  368). 

(2)  Where  the  partner  is  the  only  known  or  osten- 

sible principal;  that  is,  where  the  firm  occu- 
pies the  position  of  an  undisclosed  principal 
(p.  369). 

(3)  Where  the  partner  has  paid  away  money  of  the 

firm  under  circumstances  which  give  a  right 
to  recover  it  back  (p.  369). 

(c)  Dormant   partners    are    proper,  but  not  necessary, 

parties  (p.  370). 

Each  partner  is  an  agent  of  his  co-partners  within  the  scope  of 
the  partnership  business.  Hence,  he  must  sue  alone  on  contracts 
made  with  the  firm  (his  principals)  in  cases  in  which  an  action  must 
be  brought  in  the  name  of  an  agent.     The  question  whether  a  part- 

tive,  T.indl.  Partn.  (2d  Ed.)  479.  Cf.  Bond  v.  Pittard,  3  Mees.  &  W.  357.  And 
see  Kell  v.  Nainby,  10  Barn.  &  C.  20;  Harrison  v.  Fitzhenry,  3  Esp.  238;  Enix 
V.  Hays,  48  Iowa,  86;    Bishop  v.  Hall,  9  Gray  (Mass.)  430. 


366  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PKRSONS.  (Ch.   8^ 

ner  may  or  must  sue  without  joinin*?  his  co-partners  is  in  reality 
nothing:  but  the  inquiry  whether  an  agent  must  or  may  sue  on  a  con- 
tract made  with  him  on  behalf  of  his  principal.^"  Accordingly, 
where  it  expressly  appears  from  the  contract  that  it  was  entered  into 
on  behalf  of  a  firm,  an  action  thereon  must  be  brought  by  all  the 
members  composing  the  firm  at  the  time  the  contract  is  entered  in- 
to,^ ^  excepting  only  dormant  partners.  ^^  So,  where  the  action  is  on 
an  implied  contract  with  the  firm,  all  the  partners  must  join  as  plain- 
tiffs, whether  the  defendant  knew  he  was  dealing  with  the  firm  or 
not.  Thus,  if  the  funds  of  a  firm  are  lent  by  one  partner,  he  cannot 
alone  maintain  an  action  for  its  repayment  by  virtue  of  any  implied 
contract  with  himself,  for  the  promise  to  repay  which  is  implied 
by  law  is  a  promise  with  the  real  lenders  of  the  money,  and  must 
be  sued  upon  bj  them.^^ 

When  Partner  must  Sue  Alone — Sealed  Instruments. 

Where  a  contract  under  seal  is  entered  into  with  one  partner  only, 
he  alone  can  sue  upon  it.  If  it  is  entered  into  with  more  than  one, 
all  those  with  whom  it  was  expressly  entered  into  must  sue  jointly, 
and  no  others  can.^* 

Satne — Negotiahle  Instrument >i. 

No  person  can  claim  upon  a  bill  of  exchange  or  promissory  note 
except  the  parties  named  in  the  instrument.  Hence,  though  the 
party  named  in  such  instrument  is  a  partner,  the  action  must  be 
brought  in  his  name  alone,  and  not  jointly  in  the  name  of  himself 
and  his  co-partners,  who  are  not  parties.^"     This  exception  appears 

10  Dicey,  Parties,  p.   153. 

11  Badger  v.  Daonicke,  DC  Wis.  678,  14  N.  W.  821;  Wilson  v.  Wallace,  8  Serg. 
&  R.  (Pa.)  53. 

12  See  ante,  p.  364,  note  4;    Lebeck  v.  Shaftoe,  2  Esp.  468. 

13  Colly.  Partn.  p.  1012,  note,  citing  Garrett  v.  Handley,  3  Bam.  &  C.  462; 
Graham  v.  Robertson,  2  Term  R.  282;  Teed  v.  Elworthy,  14  East,  210.  In  an 
action  by  partners  on  a  contract  made  by  defendant  with  one  of  plaintiffs  only, 
plaintiffs  need  not  prove  that  defendant  understood  that  they  were  partners.  Phil- 
pott  V.  Bechtel,  104  Mich.  79,  62  N.  W.  174. 

1*  See  Dicey,  Parties,  pp.  153,  134,  101;  Metcalfe  v.  Ry croft,  6  Maule  &  S.  75; 
Colly.  Partn.  p.  1010,  note,  citing  note  to  CaboU  v.  Vaughan,  1  Saund.  291i;  Scott 
V.  Godwin,  1  Bos.  &  P.  67.  A  partner,  being  a  tenant  in  common  with  his  co- 
partner, may  recover  possession  of  the  whole  of  the  firm  real  estate,  as  against  one 
holding  the  same  without  title.      Brady  v.  Kreuger  (S.  D.)  66  N.  W.  1083. 

la  Dicey,  Parties,  pp.  153,  134;    Bowden  v,  Howell,  3  Man.  &  G.  (!38;    Driver  ▼. 


§  151)  CONTRACTS  IN  NAME  OF  PARTNER.  367 

to  be  of  small  importance,  since  the  right  to  sue  on  such  instru- 
ments is  assignable.  If  they  be  indorsed  in  blank,  any  persons  hold- 
ing them  may  sue  upon  them.  Where  a  partner  is  named  as  a  party 
to  a  negotiable  instrument,  he  may  indorse  it  to  his  firm,  and  there- 
upon an  action  may  be  maintained  by  all  the  partners  jointly.^* 
Same  —  Contract  with  Partner  Alone. 

It  may  be  that,  though  a  partner  is  acting  for  his  firm,  the  person 
with  whom  he  deals  expressly  refuses  to  contract  with  any  other 
than  the  partner  himself,  or  it  may  be  manifest,  from  the  circum- 
stances of  the  case,  that  the  contract  was  with  the  partner  personal- 
ly, and  with  him  alone.  In  such  a  case,  though  the  partner  may 
have  been,  as  a  matter  of  fact,  acting  for  his  firm,  and  the  firm  as  his 
principal  may  have  rights  against  such  partner,  yet  the  firm  has  no 
rights  against  a  person  with  whom  the  partner  dealt,  but  who  never 
contracted  with  the  firm,  and  the  partner,  who  is  the  only  person 
with  whom  he  did  contract,  is  the  only  one  who  can  sue  him  upon 
the  contract. ^^     Thus,  where  a  contract  was  made  with  one  of  sev- 

Burton,  17  Q.  B.  989;    Mynderse  v.  Snook,  53  Barb.  (N.  Y.)  234,  1  Laws  (N.  Y.) 
488. 

16  See  Bates,  Partn.  §  1017. 

17  Where  the  third  person  has  clearly  expressed  his  intention  to  deal  with  the 
agent  as  principal,  or  where  he  has  dealt  with  the  agent  on  terms  of  trust  and  con- 
fidence, or  the  nature  of  the  contract  is  fiduciary,  the  undisclosed  principal  cannot 
claim  the  benefits  of  the  contract.  "Every  man  has  a  right  to  elect  what  parties 
he  will  deal  with.  •  *  •  And,  as  a  man's  right  to  refuse  to  enter  into  a  contract 
is  absolute,  he  is  not  obliged  to  submit  the  validity  of  his  reasons  to  a  court  or 
jury."  Winchester  v.  Howard,  97  Mass.  303.  The  intention  to  deal  only  with 
the  agent  may  be  found  in  the  recitals  of  the  written  contract.  Humble  v.  Hunter, 
12  Q.  B.  310;  or  the  negotiations  attending  an  oral  one,  Winchester  v.  Howard, 
supra.  In  the  first  case,  the  question  would  be  one  of  construction  for  the  court; 
in  the  latter,  of  fact  for  the  jury.  The  intention  may  be  further  inferred  from  the 
nature  of  the  contract,  as  where  it  is  fiduciary,  or  for  personal  skill  or  service. 
Pol.  Cont.  (Gth  Ed.)  p.  67;  Eggleston  v.  Boardman,  37  Mich.  14.  But  in  the 
latter  case  it  would  seem  that,  if  the  agent  has  personally  discharged  the  trust 
or  performed  the  service,  his  undisclosed  principal  may  recover  the  compensation. 
Warder  v.  White,  14  111.  App.  50,  citing  Grojan  v.  Wade,  2  Starkie,  443;  Huff. 
Ag.  §  132.  \\here  a  landlord,  knowing  that  his  store  is  wanted  by  a  firm  of  four 
persons  in  which  to  carry  on  their  business,  makes  a  lease  to  one  of  them,  and  two 
of  the  others  sign  as  sureties,  and  the  other  is  in  no  way  a  party  to  the  lease,  only 
the  one  named  as  lessee  can  sue  for  breach  of  the  lease.  Burwitz  v.  JefiPers,  103 
Mich.  512,  61  N.  W.  784. 


368  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.    8 

eral  partners  in  his  individual  capacity,  and  he  at  the  time  declared 
that  he  alone  was  interested  in  it,  it  was  held  that  the  other  part- 
ners, although  they  might  be  interested  in  it,  could  not  sue  upon 
it;"    for,  though  the  partner  might,  as  regards  his  fellow  partners, 
act  as  their  agent,  yet  *'if  one  partner  makes  a  contract  in  his  indi- 
vidual capacity,  and  the  other  partners  are  willing  to  take  the  benefit 
of  it,  they  must  be  content  to  do  so  according  to  the  mode  in  which 
the  contract  was  made."  "     So,  if  one  contracts  with  an  agent,  in 
consideration  of  the  known  personal  capabilities  of  the  agent,  he  can- 
not be  made  liable  to  the  principal  for  whom  the  agent  was  acting.  ='" 
This  exception  contains  the  principle  which  governs  all  the  excep- 
tional cases  in  which  a  partner  must  sue  alone  for  a  breach  of  con- 
tract.    The  reason  of  this  peculiarity  always  is  that  the  other  con- 
tracting party  has  contracted  with  the  partner  alone.     That  the  eon- 
tract  was  made  with  him  alone  may  appear  by  the  form  of  the  con- 
tract itself  (e.  g.  where  it  is  by  deed),  or  it  may  be  proved  from  the 
circumstances  of  the  case.     But  the  reason  why  the  partner  alone  can 
sue  will  be  found  to  be  in  every  instance  the  same,  viz.  that,  as  be- 
tween him  and  the  other  party  to  the  contract,  he  has  contracted, 
not  as  an  agent,  but  as  sole  principal.'* 

When  Partner  may  Sue  Either  Alone  or  Jointly  with  Co-partners. 
"WTiere  an  agent  makes  a  contract,  stating  who  his  principal  is, 
the  principal,  and  not  the  agent,  is  the  person  generally  the  party 
to  the  contract,  if  the  agent  have  the  authority  he  alleges.  But,  on 
the  other  hand,  an  agent  may,  and  often  does,  make  himself  person- 
ally a  party  to  the  contract,  if  the  form  of  the  contract  be  such  as  to 
amount  to  saying,  'Although  I  am  an  agent  only,  nevertheless  I  con- 
tract for  myself;    and,  although  the  principal  may  in  some  cases 

18  Lucas  V.  Delacour,  1  Maule  &  S.  249.  "Where,  in  a  written  instrument, 
the  agent  has  represented  himself  in  express  terms  or  recitals  as  the  real  and  only 
principal,  the  undisclosed  principal  cannot  maintain  an  action  in  his  own  name, 
since  parol  evidence  would  be  inadmissible  to  vary  the  express  terms  and  recitals 
of  the  written  instrument.  Humble  v.  Hunter,  12  Q.  B.  310;  Schmaltz  v.  Avery, 
16  Q.  B.  655;    Harrow  v.  Produce  Co.,  57  Fed.  463."     Huff.  Ag.  §  133. 

i»Id. 

80  Robson  V.  Drummond,  2  Barn.  &  AdoL  303. 

•1  See  Dicey,  Parties,  p.  133>. 


§  151)  CONTRACTS  IN  NAME  OF  PARTNER.  369 

take  advantage  of  such  a  contract,  the  agent,  being  the  oontraoting 
party  is  clearly  liable,  and  can  therefore  sue  upon  it."  " 

Sains — Fb^m  as  an   Undisclosed  Principal. 

"It  is  a  well-established  rule  of  law  that,  where  a  contract  not  un- 
der seal  is  made  by  an  agent  in  his  own  name  for  an  undisclosed 
principal,  either  the  agent  or  the  principal  may  sue  on  it;  the  de- 
fendant in  the  latter  case  being  entitled  to  be  placed  in  the  saine 
situation  at  the  time  of  the  disclosure  of  the  real  principal  as  if  the 
agent  had  been  the  contracting  party.  The  rule  is  most  frequently 
acted  upon  in  sales  by  factors,  agents,  or  partners,  in  which  case  ei- 
ther the  nominal  or  the  real  plaintiff  may  sue;  but  it  may  be  equally 
applied  to  other  cases."  " 

Saine — Recovery  of  Money  Paid  under  Fraud  or  Ifistake. 

"If  an  agent  pays  money  for  his  principal,  by  mistake  or  other- 
wise, which  he  ought  not  to  have  paid,  the  agent,  as  well  as  the  prin- 
cipal, may  maintain  an  action  to  recover  it  back."  **  There  is  no 
reason  why  tliis  rule  should  not  apply  to  payments  made  by  one  part- 
ner for  his  firm,  and  it  has  been  held  that  where  a  partner  enters 
into  a  contract  under  seal  for  the  payment  of  money,  and  the  money 
is  paid  out  of  funds  of  the  firm,  and  it  then  appears  that  the  contract 
was  invalid  on  the  ground  of  fraud,  the  partner  who  entered  into  the 
covenant  may  sue  alone  for  the  recovery  back  of  the  money.^"^ 

Saine — Reason  and  Lvmitafion  of  Rule. 

The  right  to  bring  the  suit  either  in  the  name  of  the  partner  with 
whom  the  contract  was  made,  or  in  the  name  of  all  the  partners 
jointly,  rests  on  the  ground  that,  while  the  partners  collectively — 
i.  e.  the  firm — have  the  ordinary  right  of  every  principal  to  sue  for 
the  breach  of  a  contract  made  on  their  behalf,  the  agent  has  been 
dealt  with  as  a  party,  though  not  the  only  party,  to  the  contract,  or  to 
the  transaction  which  gives  a  right  of  action  as  if  there  had  been  a 
breach  of  contract;    e.  g.  where  the  partner  sues  for  money  of  the 

2  2  Fisher  v.  Marsh,  34  Law  J.  Q.  B.  178,  per  Blackburn,  J.  Of.  Hilliker  t. 
Loop,  5  Vt.  116. 

«3  Sims  V.  Bond,  5  Bam.  &  Adol.  393,  per  curiam. 
2  4  Story,  Ag.   §  398. 

»B  Lefevre  v.  Boyle,  3  Bam.  &  Adol.  877. 
GEO. PART.— 24 


370  ACTIONS    BETWEEN    PABTNERS    AND   THIRI)    PERSONS.  (Ch.   8 

firm  which  he  was  wrongfully  induced  to  pay.*^  The  choice  or  elec- 
tion of  suing  either  in  the  name  of  the  agent  partner,  or  all  the  part- 
ners jointly,  is  subject  to  certain  limitations,  the  object  of  which  is 
to  prevent  this  right  of  election  from  being  so  exercised  as  to  work 
injustice  to  any  of  the  persons  concerned  in  the  contract. 

First.  The  partner's  right  to  sue  is  subject  to  the  firm's  right  to  in- 
terpose. WTierever  the  principal,  as  well  as  the  agent,  has  a  right 
to  maintain  a  suit  upon  any  contract  made  by  the  latter,  he  may  gen- 
erally supersede  the  right  of  the  agent  to  sue  by  suing  in  his  own 
name.*^  So,  the  principal  may,  by  his  own  intervention,  intercept 
or  suspend  or  extinguish  the  rights  of  the  agent  under  the  contract, 
as  if  he  makes  other  arrangements  with  the  other  contracting  party, 
or  waives  his  claims  under  it,  or  receives  payment  thereof,  or  in  any 
other  manner  discharges  it.  This,  indeed,  results  from  the  general 
principle  of  law  that  every  man  may  waive  or  extinguish  rights  the 
benefit  whereof  exclusively  belongs  to  himself,  and  that  whatever 
rights  are  acquired  by  an  agent  are  acquired  for  his  principal." 

Secondly.  Where  an  undisclosed  principal  sues  on  a  contract  made 
with  his  agent,  "the  defendant  is  entitled  to  be  placed  in  the  same 
situation  at  the  time  of  the  disclosure  of  the  real  principal  as  if 
the  agent  had  been  the  contracting  party";"  that  is,  the  defend- 
ant may  avail  himself  of  all  defenses  which  would  have  been  avail- 
able to  him  against  the  agent  at  the  time  of  the  disclosure,  had  that 
agent  been  really  a  principal.^** 

Dormcmt  and  Nominal  Partners. 

When  the  contract  is  made  in  the  name  of  one  partner,  but  un- 
der circumstances  entitling  the  firm — i.  e.  all  the  partners  jointly — 
to  sue,  the  same  considerations  as  to  dormant  and  nominal  partners 
apply  as  in  the  case  of  contracts  made  in  the  firm  name.'* 

2«  Dicey,   Parties,  p.  140. 

S7  Sadler  v.  Leigh,  4  Camp.  195. 

28  Story,  Ag.  §  403. 

2  9  Sims  v.  Bond,  5  Bam.  &  Adol.  393,  per  curiam. 

»o  Thomson  v.  Davenport,  9  Barn.  &  C.  78,  2  Smith,  Lead.  Cas.  (7th  Ed.)  359. 

81  See  ante,  p.  363. 


§    152)  CLAIMS    ARISING    EX    DELICTO.  871 


SAME— CLAIMS  ARISING  EX  DELICTO. 

152.  In  an  action  ex  delicto  to  recover  damages  suffered 
by  partners  jointly,  i.  e.,  damages  to  the  firm,  all 
the  partners  must  join  as  plaintiffs. 

WTiere  the  same  act  that  causes  a  damage  to  all  the  partners 
jointly  as  a  firm  also  causes  a  separate  and  personal  damage  to  one 
or  more  of  the  partners,  two  or  more  causes  of  action  exist.  The 
joint  damage  must  be  recovered  in  a  joint  action  by  all  the  part- 
ners, and  the  individual  damage  must  be  recovered  in  separate  ac- 
tions by  each. 

With  respect  to  actions  by  partners  not  founded  on  any  breach 
of  contract,  or  of  quasi  contract,  but  on  some  tort,  the  general 
principle  is  that,  where  a  joint  damage  accrues  to  several  persons 
from  a  tort,  they  ought  all  to  join  in  an  action  founded  upon  it,^'^ 
while,  on  the  other  hand,  several  persons  ought  not  to  join  in  an 
action  ex  delicto,  unless  they  can  show  a  joint  damage.'" 

These  doctrines  are  well  illustrated  by  actions  for  libel.  A  libel 
on  a  firm  can  be  made  the  subject  of  an  action  by  the  firm.'*  If 
the  libel  reflects  directly  on  one  partner,  and  through  him  on  the 
firm,  two  actions  will  lie,  viz.  one  by  the  party  libeled,  and  the 
other  by  him  and  his  co-partners;  but  the  damage  in  the  first  action 
must  not  appear  to  be  joint,  nor  must  that  in  the  second  appear  to 
be  confined  to  the  libeled  partner  only.*"  If  one  partner  is  libeled, 
and  the  firm  cannot  be  shown  to  have  been  damnified,  an  action  for 

«»  See  1  Wm.  Saund.  291m;  Addison  v.  Overend,  6  Term  R,  766;  Sedgworth 
V.  Overend,  7  Term  R.  279. 

•  8  2  Wm.  Saund.  116a;  Noonan  v.  Orton,  32  Wis.  106;  Donnell  v.  Jones,  13 
Ala.  490;  Medbury  v.  Watson,  6  Mete.  (Mass.)  246;  Robinson  v.  Mansfield,  13 
Pick.  (Mass.)  139;  Trott  v.  Irish,  1  Allen  (Mass.)  481.  Cf.  Duffy  t.  Gray,  52 
Mo.  528. 

8*  See  Cooke  v.  Batchelor,  3  Bos.  &  P.  150;  Forster  t.  Lawson,  3  Bing.  452; 
Williams  v.  Beaumont,  10  Bing.  260;  Metropolitan  Saloon  Omnibus  Co.  v.  Haw- 
kins, 4  Hurl.  &  N.  87;  Taylor  v.  Church,  1  E.  D.  Smith  (N.  Y.)  279;  Duffy  v. 
Gray,  52  Mo.  528;    Donnell  v.  Jones,  13  Ala.  490. 

S5  See  Harrison  v.  Bevington,  8  Car.  &  P.  708;  Forster  v.  Lawson,  3  Bing.  452; 
2  Wm.  Saund.  117b;  Haythorn  v.  Lawson,  3  Car.  &  P.  196;  Duffy  v.  Gray,  52 
Mo.  .528;  Donnell  v.  Jones,  13  Ala.  490;  Noonan  v.  Orton.  32  Wis.  106;  Davis 
T.  Ruff,  1  Cheves  (S.  C.)  17. 


372  ACTIONS    BETWEKN   PARTNERS    AND    THIRD    PERSONS.  (Ch.  8 

the  libel  should  be  brought  m  the  name  of  the  individual  partner 
aggrieved,  and  not  by  the  firm;'*  and  he  may  sue  alone,  although 
the  libel  more  particularly  affects  him  in  the  way  of  his  business.*^ 
Moreover,  a  general  statement  not  clearly  pointing  to  any  partic- 
ular person,  but  libelous  as  to  an  entire  class,  may  be  treated  by 
any  individual  of  that  class,  who  can  show  that  he  was  in  fact  in- 
tended, as  a  libel  on  himself;  and  this  principle  is  as  applicable 
to  libels  affecting  a  firm  as  to  those  affecting  single  individuals." 

PARTIES  TO  ACTION  ON  FIRM  LIABILITY. 

153.  This  subject  -will  be  treated  under  the  following  heads: 

(a)  Liabilities  arising  ex  contractu  (p.  o72). 

(b)  Liabilities  arising  ex  delicto  (p.  378). 

SAME— LIABILITIES  ARISING   EX  CONTRACTU. 

154.  All  persons  "w^ho  are  partners  at  the  time  -when  a  con- 

tract is  made  by  or  on  behalf  of  the  firm   must  be 
joined  as  defendants  in  an  action  for  its  breach,  ex- 
cept 
EXCEPTIONS — (a)  Dormant  partners  are  proper,  but  not 
necessary,  parties  (374). 

(b)  Nominal  partners  are  not  necessary  parties,  but  are 

proper  parties  in  cases  -wrhere  they  have  been  held 
out  under  such  circumstances  as  to  render  them 
liable  as  actual  partners  (p.  375). 

(c)  Where  the  contract  has  been  made  in   the   name  of 

one  partner,  he  alone  can  be  sued  in  the  following 
cases: 

(1)  Where  the  contract  is  under  seal  (p.  375). 

(2)  Where  the  contract  is  a  negotiable  instrument 

(p.  376). 

(3)  Where  credit  was  given  exclusively  to  the  part- 

ner in  whose  name  the   contract  was  made 
(p.  376). 

••  Solomons  v.  Medex,  1  Starkie,  191. 

»7  HarrisoQ  v.  Bevington,  8  Car.  &  P.  708;   Robinson  v.  Marchant,  7  Q.  B.  918. 

»•  Le  Fanu  v.  Malcolmson,  1  H.  L.  Cas.  G37. 


§    154)  LIABILITIES    ARISING    EX    CONTRACTU.  373 

(d)  Where  the  contract  has  been  made  in  the  name  of 
one  partner,  an  action  thereon  may  be  main- 
tained either  against  such  partner  alone  or 
against  all  the  partners  jointly  in  the  folio-w- 
ing cases: 

(1)  Where   the   partner  contracted  individually,  as 

well  as  on  behalf  of  the  firm  (p.  376). 

(2)  Where  the  contract  does   not  sho^w  that  it  was 

entered  into  on  behalf  of  the  firm;  that  is, 
where  the  firm  occupies  the  position  of  undis- 
closed principal  (p.  377). 

As  has  been  seen,  contracts  with  a  firm  are  simply  contracts  with 
all  the  partners  jointly.  All  persons  who  are  jointly  liable  on  a 
contract  must,  as  a  general  rule,  be  joined  in  an  action  thereon. 
Where  a  contract,  therefore,  is  made  by  or  on  behalf  of  a  firm, 
as  where  it  is  made  in  the  firm  name,  all  the  persons  who  were 
partners  at  the  time  it  was  made  must,  as  a  general  rule,  be  joined 
as  defendants.  The  partnership  name  is  merely  a  symbol  to  des 
ignate  all  the  partners,  without  naming  them,  and  to  show  that  the 
contract  was  a  partnership  transaction.  But,  even  where  the  con- 
tract was  entered  into  by  an  agent,  or  by  one  partner,  if  it  appears 
from  the  contract  that  it  was  a  contract  with  the  firm,  then  all  the 
partners  must  be  joined,  because  they  are  joint  principals.^^ 

3  9  Page  V.  Brant,  18  111.  37;  Pettis  v.  Atkins.  60  111.  454;  Curtis  v.  Hollings- 
head,  14  N.  J.  Law,  402;  Siuionds  v.  Speed,  G  Rich.  Law,  290;  Lippineott  v.  Car- 
riage Co.,  25  Fed.  577.  Nonjoinder  of  all  the  partners  can  only  be  taken  advan- 
tage of  by  plea  in  abatement.  Sinsheimer  v.  Manufactuiing  Co.,  54  111.  App.  151  • 
Puschel  v.  Hoover,  16  IlL  340;  Mershon  v.  Hobensack,  22  N.  J.  Law,  372;  Smith 
V.  Cooke,  31  Md.  174.  In  an  action  against  the  members  of  the  firm  of  R.  &  Co. 
on  a  contract  made  in  the  firm  name  by  defendant  R.,  it  appeared  that  when  the 
contract  was  made  the  other  defendants  were  not  R.'s  partners,  and  who  were  his 
partners  then  did  not  appear.  Held,  that  the  complaint  must  be  dismissed  as  to  all 
the  defendants,  including  R.  Hand  v.  Rogers  (City  Ct.  N.  Y.)  35  N.  Y.  Supp.  712, 
affirmed  25  Civ.  Proc.  R.  254,  16  Misc.  Rep.  17,  37  N.  Y.  Supp.  657.  Whert-  all  the 
partners  are  sued  on  a  partnership  debt,  and  the  action  is  barred  as  to  one,  he  not 
Laving  been  made  a  party  at  the  commencement  of  the  action,  no  recovery  can  be 
tad  against  the  others.  Fish  v.  Farwell,  54  111.  App.  457.  In  an  action  against  the 
members  of  a  voluntary  association,  upon  a  contract,  the  recovery  must  be  against 
all  or  none.  Pettis  v.  Atkins,  60  111.  454.  In  Kent  v.  Holliday,  17  Md.  387,  it  was 
held  that  in  an  action  on  a  partnership  contract  all  those  who  were  partners  at  the 


374  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.  S 

Dorma/nt  Partiurs. 

It  has  been  seen  that  dormiint  and  secret  partners  are  liable  on 
all  contracts  entered  into  on  behalf  of  the  firm  to  which  they  be- 
lonof;  and,  whether  such  a  contract  is  written  or  parol,  express 
or  implied,  it  is  clear  that  they  may  be  sued  upon  it.  But  it  is 
perfectly  proper  not  to  join  them.  A  person  who  holds  himself  out 
to  another  as  the  only  person  with  whom  that  other  is  dealing 
cannot  afterwards  say  that  such  other  was  also  dealing  with  some- 
body else.  In  short,  dormant  partners  are  proper,  but  not  neces- 
sary, parties.*" 

time  of  the  contract  ought  to  be  joined  as  defendants,  for  such  a  contract  la  a  joint 
contract;  and  that  a  declaration  which  discloses  that  there  was  a  joint  contractor 
at  the  time  the  contract  sued  on  is  made,  and  does  not  aver  he  was  dead,  or  a  non- 
resident of  the  county,  or  account  in  any  other  way  for  his  not  being  joined  in  the 
action,  is  bad  on  demurrer.  Every  co-partnership  is  required  to  file  with  the  town 
clerk  in  New  Hampshire,  and  with  the  prothonotary  of  the  county  in  Pennsylvania, 
a  certificate  of  the  names  and  residences  of  all  the  partners,  or  no  suits  against  them 
will  be  abated  for  nonjoinder.  NEW  HAMPSHIRE:  Pub.  St.  1891,  c.  121,  §§  1, 
2.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1S94,  "Partnership,"  §§  1,  2.  Where 
two  or  more  persons  are  bound  by  contract,  judgment,  decree,  or  statute,  whether 
jointly  only,  or  jointly  and  severally,  or  severally  only,  and  including  the  parties  of 
negotiable  papers,  upon  orders  and  checks  and  sureties  on  the  same  or  separated 
instruments,  or  by  any  liability  growing  out  of  the  same,  the  action  thereon  may,  at 
the  plaintiff's  option,  be  brought  against  any  or  all  of  them.  IOWA:  McClain's 
Code  1888,  §  3755.  MINNESOTA:  Gen.  St.  1894,  §  5166.  KANSAS:  Gen.  St. 
1889,  par.  1101.  KENTUCKY:  St.  1894,  §  476.  TENNESSEE:  Mill.  &  V. 
Code  1884,  §  34i.4.  MISSOURI:  Rev.  St.  1889,  §  1995.  SOUTH  CAROLINA: 
Code  Civ.  Proc.  1893,  §  141.  NEW  MEXICO:  Comp.  Laws  1884,  §  1885.  DIS- 
TRICT OF  COLUMBIA:  Rev.  St.  1873,  §  827.  An  action  or  judgment  against 
one  or  more  persons  jointly  bound  is  not  in  several  states  a  bar  to  proceedings 
against  the  others.  VERMONT:  V.  S.  1894,  §  1182.  IOWA:  McClain's  Code 
1888,  §  3755.  KENTUCKY:  St.  1894,  §  477.  NEW  MEXICO:  Comp.  Laws 
1884,  §  1885.  DISTRICT  OF  COLUMBIA:  Rev.  St.  1873,  §  827.  So,  in  all 
cases  of  joint  obligations  or  joint  assumptions  of  co-partners  and  others,  suits  may 
he  brought  against  any  one  or  more  of  those  liable.  MISSOURI:  Rev.  St.  1889, 
§  2387.  NEW  MEXICO:  Comp.  Laws  1884,  §  1846.  Judiciary  Act,  c.  13,  §  18, 
providing  that  no  judgment,  without  complete  satisfaction,  against  a  part  only  of 
the  defendants  in  an  action  upon  a  joint  contract,  shall  be  a  bar  to  a  future  action 
against  such  defendants  as  were  not  served  in  the  first  action,  impliedly  allows  an 
action  against  partners,  who  both  reside  out  of  the  state,  to  proceed  against  one  of 
them  upon  whom  the  writ  is  served  while  temporarily  in  the  state.  Nathanson  t. 
Spitz  (R.  I.)  31  Atl.  690. 
40  New   York  Dry  Dock   Co.  t.  Tread  well,  19  Wend.  (N.  Y.)  625;    Leslie   r. 


§    154)  LIABILITIES    ARISING    EX    CONTRACTU.  375 

Nominal  Partners. 

Nominal  partners  are  not  actual  partners.  As  has  been  seen,  their 
liability  on  firm  contracts  rests  on  estoppel,  and  not  on  the  fact  that 
they  are  actual  parties  to  it.*^  A  plaintiff,  in  an  action  on  a  firm 
contract,  may  therefore  waive  the  benefit  of  the  estoppel,  and  sue 
only  the  actual  partners,  or  he  may  join  the  nominal  partner,  as  he 
sees  fit.  In  other  words,  nominal  partners  are  not  necessary  par- 
ties, but  are  proper  parties,  in  cases  where  they  have  been  held  out 
under  such  circumstances  as  to  render  them  liable  as  actual  part- 
ners.*'' 

When  Agent- Partner  must  he  Sued  Alone — Deeds. 

WTiere  a  partner  contracts  by  deed  in  his  own  name,  he  alone 
can  be  sued  thereon.     This  is  a  mere  application  of  the  rule  that 

Wiley,  47  N.  Y.  648;  Scott  t.  Conway,  58  N.  Y.  619;  North  v.  Bloss,  30  N.  Y. 
374;  Wright  v.  Herrick,  125  Mass.  154;  Page  v.  Brant,  18  111.  37;  Cox  v.  Hick- 
man, 8  H.  L.  Cas.  268;  Cleveland  v.  Woodward,  15  Vt.  302;  De  Mautort  v. 
Saunders,  1  Barn.  «&  Adol.  398;  Chase  v.  Deming,  42  N.  H.  274;  Dicey,  Parties, 
[).  368. 

*i  See  ante,  p.  00. 

42  Hatch  V.  Wood,  43  N.  H.  633;  Scarf  v.  Jardine,  7  App.  Cas.  345.  "But. 
where  the  nominal  partner  has  never  been  known  as  such  to  a  particular  person, 
it  would  rather  appear  (see,  contra.  Young  v.  Axtell,  cited  Waugh  v.  Carver,  2  H.  Bl. 
235,  1  Smith,  Lead.  Cas.  [6th  Ed.]  846,  where  it  is  stated  by  Lord  Mansfield  'that  as 
the  defendant  had  suffered  her  came  to  be  used  in  the  business,  and  held  herself  oui; 
as  a  partner,  she  was  certainly  liable,  though  the  plaintiff  did  not  at  her  time  of 
dealing  know  that  she  was  a  partner,  or  that  her  name  was  used.'  Id.  847)  that 
such  person  cannot  join  him  in  an  action  against  the  firm,  for  the  rule  which  im- 
poses on  a  nominal  partner  the  responsibilities  of  a  real  one  is  framed  in  order  to 
prevent  those  persons  from  being  defrauded  or  deceived  who  may  deal  with  the 
firm.  But,  where  the  person  dealing  with  the  firm  has  never  heard  of  him  as  a 
component  part  of  it,  that  reason  no  longer  applies.  Waugh  v.  Carver,  1  Smith, 
Lead.  Cas.  (6th  Ed.)  860.  A  plaintiff's  right  to  sue  a  nominal  partner  depends 
upon  its  being  proved  'that  the  defendant  held  himself  out,  not  to  the  world,  for 
that  is  a  loose  expression,  but  to  the  plaintiff  himself,  or  under  such  circumstances 
of  publicity  as  to  satisfy  a  jury  that  the  plaintiff  knew  of  it,  and  believed  him  to 
be  a  partner.'  Dickinson  v.  Valpy,  10  Barn.  &  C.  140,  per  Parke,  J.  And  com- 
pare Shott  V.  Strealfield,  1  Moody  &  R.  9;  Alderson  v.  Popes,  1  Camp.  404,  note. 
The  rule  as  to  a  nominal  partner's  liability  to  be  sued  may,  if  this  view  of  his 
position  be  correct,  be  thus  summed  up:  He  is  simply  an  apparent  partner,  and 
may  be  sued  by  any  person  to  whom  he  appears  to  be  a  partner,  but  cannot  be  sued 
by  any  person  to  whom  he  hag  not  appeared  to  be  a  partner."  Dicey,  Parties,  p. 
270. 


376  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.  8 

the  person  to  be  sued  on  a  contract  by  deed  is  the  person  with 
whom  the  contract  is  expressed  by  the  deed  to  be  made.** 

Same — Negotiable  Inatrumerda. 

Where  a  partner  draws,  indorses,  or  accepts  a  bill  of  exchange  in 
his  own  name,  he  alone  can  be  sued  thereon.  Though  "the  rule  of 
law,  as  to  simple  contracts  in  writing  other  than  bills  and  notes, 
is  that  parol  evidence  is  admissible  to  charge  unnamed  principals, 
•  *  •  but  is  inadmissible  for  the  purpose  of  discharging  the 
agent  who  signs,  as  if  he  were  principal,  in  his  own  name,  •  •  • 
yet  it  is  conceived  that  the  law  as  to  negotiable  instruments  is  dif- 
ferent in  one  respect,  to  wit,  that  where  the  principal's  name  does 
not  appear  he  is  not  liable  on  a  bill  or  note  as  a  party  to  the  in- 
strument." ** 

Same — Credit  Criven  Exclusively  to  Agent- Pa/rtner. 

It  is  possible  that  a  third  party,  with  whom  a  partner  contracts 
as  an  agent,  on  behalf  of  his  firm  as  a  known  principal,  may  be  will- 
ing to  give  credit  to  the  agent  partner,  and  not  be  willing  to  give 
credit  to  the  firm  or  principal.  A  person  so  dealing  with  an  agent 
cannot  afterwards  sue  the  principal.*"  "If  the  principal  be  known 
to  the  seller  at  the  time  when  he  makes  the  contract,  and  he,  with 
the  full  knowledge  of  the  principal,  chooses  to  debit  the  agent,  he 
thereby  makes  his  election,  and  cannot  afterwards  charge  the  prin- 
cipal." *• 

When  Partner  may  he  Sued  Alone  or  Jointly  with  Co-partners. 

Where  a  partner  contracts  individually,  as  well  as  on  behalf  of 
his  firm,  the  action  may  be  brought  either  against  him  alone  or 
against  all  the  partners  jointly.  "A  person  who  is  acting  for  an- 
other, and  known  by  him  with  whom  he  deals  to  be  so  acting,  may 
and  will  be  personally  liable  if  he  contracts  as  a  principal,  and  that 
whether  he  contracts  by  word  of  mouth  or  in  writing.     The  differ- 

♦3  Dicey,  Parties,  pp.  271,  229,  rule  48;  Eastwood  v.  Bain,  3  Hurl.  &  N.  738; 
Bottomley  v.  Nuttall,  5  C.  B.  (N.  S.)  122,  28  Law  J.  C.  P.  110;  Appleton  v. 
Biuks,  5  East,  147,  148;    Firemen's  Ins.  Co.  v.  Floss,  67  Md.  403,  10  Atl.  139. 

44  Byles,  Bills  (8th  Ed.)  34,  35.  See  Pentz  v.  Stanton,  10  Wend.  (N.  Y.)  271; 
Leadbitter  v.  Farrow,  5  Maule  &  S.  345.  Cf.  Lindus  v.  Bradwell,  5  C.  B.  583,  17 
Law  J.  C.  P.  121. 

4  6  Addison  v.  Gandasequi,  4  Taunt.  573,  2  Smith,  Lead.  Cas.  (8th  Ed.)  392. 

4  6  Thomson  t.  Davenport,  9  Barn.  &  C.  78,  2  Smith,  Lead.  Cas.  (8th  Ed.)  39a 


§    154)  LIABILITIES    ARISING    EX    COKTRACTD.  377 

ence  is  that,  if  the  contract  is  by  word  of  mouth,  it  is  not  possible 
to  say,  from  the  agent  using  the  words  T  and  'me';  whereas,  if 
the  contract  is  in  writing,  signed  in  his  own  name,  and  speaking  of 
himself  as  contracting,  the  natural  meaning  of  the  words  is  that 
binds  himself  personally,  and,  accordingly,  he  is  taken  to  do  so. 
•  •  *  It  is  well  settled  that  an  agent  is  responsible,  though 
known  by  the  other  party  to  be  an  agent,  if,  by  the  terms  of  the 
contract,  he  makes  himself  the  contracting  party."*'  If  the  con- 
tract is  by  parol,  it  is  merely  a  question  of  evidence  whether  the 
partner  intended  to  bind  himself  personally.  If  the  contract  is  in 
writing,  it  is  a  question  of  interpretation.  Thus,  where  an  agent 
contracts  in  his  own  name,  without  mentioning  his  principal,  though 
the  fact  of  his  being  an  agent  is  known  to  the  other  party,  he  is 
personally  liable.*^  The  fact,  however,  that  an  agent  is  clearly 
liable  on  a  written  contract,  does  not  free  his  principal  from  lia- 
bility; for,  though  a  person  who  appears  to  be  liable  on  the  face  of 
a  written  contract  cannot  give  evidence  to  show  that  he  is  not 
liable,  since  to  do  this  would  be  to  contradict  the  written  contract, 
there  is  nothing  to  prevent  the  production  of  evidence  that  a  per- 
son who  is  not  liable  on  the  face  of  a  contract  is  in  reality  charge- 
able under  it.** 

Same — Firm  as  Undisclosed  Principal 

Where  a  partner  contracts  in  his  own  name,  but  in  reality  for  his 
firm,  which  occupies  the  position  of  an  undisclosed  principal,  either 
the  partner  so  contracting  or  the  firm — i.  e.  all  the  partners  jointly — 
may  be  sued.""     This  exception  might  be  included  under  the  last. 

*7  Williamson  v.  Barton,  31  Law  J.  Exch.  174,  per  Bramwell,  B.  See,  also, 
Dicey,  Parties,  255;  Story,  Ag.  §  209;  Higgins  v.  Senior,  8  Mees.  &  W.  834;  Par- 
ker V.  Winlow,  7  El.  &,  Bl.  942.  Cf.  Fisher  v.  Marsh,  34  Law  J.  Q.  B.  177,  6 
Best  &  S.  411. 

*8  Higgins  V.  Senior,  8  Mees.  &  W.  834. 

•»»  Dicey,  Parties,  p.  25G;  Paterson  v.  Gandasequi,  15  East,  62,  2  Smith,  Lead, 
Caa.  (6th  Ed.)  613. 

BO  See  Dicey,  Parties,  256;  Paterson  v.  Gandasequi,  supra.  Where  one  assumes 
to  act  as  agent  for  a  single  member  of  a  firm  in  the  sale  of  partnership  property, 
the  receipt  by  the  assumed  principal  of  the  money  received  on  the  sale  is  a  ratifi- 
cation of  the  agency,  and  an  adoption  of  the  means  by  which  it  was  obtained.  And, 
when  the  purchaser  was  ignorant  of  the  existence  of  the  partnership,  the  other 
partner!  need  not  be  joined  in  an  action  to  recover  back  the  money  paid,  for  fraud 


378  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.   8 


SAME— LIABILITIES  ARISING  EX  DELICTO. 

155.  One  or  any  or  all  of  the   partners   in  a  firm  may  be 

sued  separately   or  jointly   for  a  wrong  committed 
by  the  firm. 

Actions  of  Tort  against  Partners. 

It  is  not  every  tort  which,  though  committed  by  several  persons 
acting  together,  is  legally  imputable  to  them  all  jointly;  ^^  but,  sup- 
posing a  tort  to  be  imputable  to  a  firm,  an  action  La  respect  of  it 
may  be  brought  against  all  or  any  of  the  partners.  If  some  of  them 
only  are  sued,  they  cannot  insist  upon  the  other  partners  being 
joined  as  defendants;  '^  and  this  rule  applies  even  where  the  tort 
in  question  is  committed  by  an  agent  or  servant  of  the  firm,  and 
not  otherwise  by  the  firm  itself.^*  But  there  is  a  distinction  be 
tween  ordinary  actions  of  tort  and  those  which  are  brought  against 
persons  in  respect  of  their  common  interest  in  land;  for  all  joint 
tenants  or  tenants  in  common  ought  to  be  joined  in  an  action  for 
an  injury  arising  from  the  state  of  their  land,  and  this  rule  applies 
to  partners  as  well  as  to  persons  who  are  not  partners.'* 

EFFECT  OF  CHANGES  IN  FIRM. 

156.  Changes  in  the  membership  of  a  firm  may  arise  by 

(a)  The  admission  of  a  new  member  (p.  379). 

(b)  The  retirement  of  an  old  member  (p.  381). 

(c)  The  death  of  a  member  (p.  384). 

(d)  The  bankruptcy  or  insolvency  of  a  member  (p.  385). 

on  the  part  of  the  agent,  or  for  mistake.  The  declared  principal  becomes  liable 
immediately  upon  the  receipt  of  the  money,  and  his  subsequent  division  of  it 
among  persons  who  were  strangers  in  the  transaction  to  the  plaintiff  cannot  affect 
his  liability.      Leslie  v.  Wiley,   47  N.  Y.  648. 

51  See  Hale,  Torts,  p.  167. 

B2  Sutton  V.  Clarke,  6  Taunt.  29;    Hale,  Torts,  p.  123;    Lindl.  Partn.  p.  283. 

63  Mitchell  V.  Tarbutt,  5  Term  R.  649;  Ansell  v.  Waterhouse,  6  Maule  &  S. 
885;   Wood  v.  Luscomb,  23  Wis.  287;   Howe  v.  Shaw,  56  Me.  291. 

54  Lindl.  Partn.  283;   Mitchell  v.  Tarbutt,  5  Term  R.  649. 


§§    157-159)  ADMISSION    OF    NEW    MKMBER.  379 


SAME— ADMISSION  OF  NEW  MEMBER. 

157.  Where  a  new  member  has  been  taken  into  a  firm,  he 

cannot  join  as  plaintiff  in  actions  on  claims  due  the 

old  firm,  except 
EXCEPTIONS— (a)  Where  the  claim  has  been  assigned  to 

the  new  firm  (p.  3S0). 
(b)  Where,  by  consent  of  all  the  parties,  the  new  firm  is 

substituted  for  the  old  as  the  obligee  (p.  380). 

158.  Where  a  new  member  has  been  taken  into  a  firm,  he 

cannot  be  joined  as  a  defendant  in  an  action  on  a  lia- 
bility of  the  old  firm,  except 

EXCEPTIONS— (a)  Where,  by  consent  of  all  parties,  the 
new  firm  is  substituted  as  the  obligor  (jp.  381). 

(b)  Where  the  incoming  partner  has  become  liable  to 
creditors  by  assuming  debts  of  the  old  firm,  he 
may  be  joined  or  sued  separately,  according  as  his 
liability  is  joint  or  several^  (p.  381). 

159.  Where  the  circumstances   are  not   such  that  the  new 

partner  can  sue  or  be  sued,  as  the  case  may  be, 
the  action  must  be  brought  by  or  against  the  part- 
ners of  the  old  firm,  precisely  as  though  no  change 
had  occurred. 

The  admission  of  a  new  member  into  a  firm,  as  has  been  repeat- 
(dly  said,  operates  as  the  formation  of  a  new  firm,  and  the  disso- 
lution of  the  old  one.  In  other  words,  prima  facie,  the  new  part- 
ner is  admitted  for  the  future,  and  not  for  the  past.  The  claims 
due  the  old  firm  belong  to  the  members  of  the  old  firm,  and  are  to 
be  enforced  by  them.  Similarly,  a  new  member  cannot  be  sued  on 
a  liability  of  the  old  firm.  The  liabilities,  like  the  claims  of  the 
old  firm,  belong  to  the  old  members.  There  are,  however,  certain 
exceptions  or  apparent  exceptions  to  these  rules;  and,  under  cer- 
tain circumstances,  the  incoming  partner  may  sue  or  be  sued  as  the 
case  may  be.     But,  where  the  circumstances  are  not  such  that  the 

»'  See  ante,  p.  245. 


380  ACTIONS    BETWEEN   PARTNERS    AND    THIRD    PERSONS.  (Ch.   8 

new  partner  can  sue  or  be  sued,  the  action  must  be  brought  by 
or  against  the  partners  of  the  old  firm,  precisely  as  though  no  change 
had  occurred. ■*• 
Exceptions —  When  New  Member  may  Joi/n  as  Plaintiff. 

The  first  exception  to  the  rule  that  a  new  member  cannot  sue 
on  a  claim  due  the  old  firm  is  where  there  has  been  an  assignment 
of  such  claims  by  the  old  firm  to  the  new.  Assignees  of  choses  in 
action  are  now  almost  universally  allowed  to  sue  thereon  in  their 
owTi  names. "^ 

The  second  exception  is  where,  by  consent  of  all  the  parties  in- 
terested, the  new  firm  is  substituted  for  the  old  as  the  obligee.  This 
exception  differs  from  the  first  as  a  novation  differs  from  an  as- 
signment, viz.  by  the  consent  of  the  creditor,  the  discharge  of  the 
old  obligation,  and  the  creation  of  a  new  one.  In  such  a  case  the 
new  member  may  of  course  join,  but  the  exception  is  only  an  ap- 
parent one,  for  the  action  is  on  the  obligation  to  the  new  firm,  and 
not  on  the  obligation  to  the  old  one." 

B6  Lindl.  Partn.  p.  286;  "^ilsford  v.  Wood,  1  Esp.  183;  Vere  v.  Ashby,  10 
Barn.  &  C.  288;  Young  v.  Hunter,  4  Taunt.  582;  Hatchett  t.  Blanton,  72  Ala. 
423;  Ringo  v.  Wing,  49  Ark.  457,  5  S.  W.  787;  Bracken  v.  Dillon,  64  Ga.  243. 
An  incoming  partner  is  not  liable  on  a  written  agreement  of  employment  for  more 
than  a  year,  made  before  bis  entry  into  the  firm,  and  signed  in  the  firm  name  only. 
Hughes  V.  Gross  (Mass.)  43  N.  E.  1031. 

6T  See  Viles  t.  Bangs,  36  Wis.  131;  Walker  v.  Steel,  9  Colo.  388,  12  Pac.  423.  For 
cases  illustrating  the  common-law  rule  see  Howell  v.  Reynolds,  12  Ala.  128; 
Molen  V.  Orr,  44  Ark.  486. 

68  See  ante,  p.  252.  "In  all  these  cases,  founded  on  a  new  and  original  consid- 
eration of  benefit  to  the  defendant  or  harm  to  the  plaintiff  moving  to  the  party 
making  the  promise  either  from  the  plaintiff  or  original  debtor,  the  subsisting  lia^ 
bility  of  the  original  debtor  is  no  objection  to  recovery."  Farley  v.  Cleveland,  4 
Cow.  (N.  Y.)  439,  approved  in  Hoile  v.  Bailey,  58  Wis.  434,  17  N.  W.  322.  Tne 
new  member  having  covenanted,  as  between  himself  and  the  retiring  partner,  to 
pay  the  latter's  share  of  the  partnership  liabilities,  and  the  new  firm  having  made 
payments  on  the  plaintiff's  claim,  and  the  retiring  partner  having  assigned  to 
plaintiff  all  claim  he  might  have  against  such  new  member  on  the  agreement  be- 
tween them,  and  the  plaintiff  having  thereupon  brought  this  suit  against  the  new 
firm,  these  facts,  appearing  in  evidence,  would  be  sufficient  to  fairly  warrant  a  jury 
in  finding  that  plaintiff  had  accepted  the  new  firm  as  her  debtor  in  place  of  the 
old,  and  had  consented  to  tlie  substitution  which  the  several  partners  among  them- 
selves had  agreed  upon.  Creditors  of  a  dissolved  firm,  who  take  the  paper  of  the 
succeeding  firm,  release  the  retiring  members.     Smith  v.   Shelden,  35   Mich.  42; 


§§    lGO-162)  RETIREMENT   OF    OLD    MEMBEB.  381 

Same —  When  New  Member  may  he  Made  a  DefendaM — Assmnption 

of  Dehts. 

The  first  exception  to  the  rule  that  a  new  member  cannot  be  sued 
on  an  obligation  of  the  old  firm  is  where,  by  consent  of  all  the 
parties  interested,  the  new  firm  is  substituted  as  tbe  obligor.  This 
exception  to  the  rule  as  to  defendants  corresponds  to  the  similar 
exception  as  to  plaintiffs,  just  considered.  It  is  only  an  apparent 
exception,  for  the  action  is  really  on  an  obligation  of  the  new  firm, 
the  obligation  of  the  old  firm  being  discharged  in  consideration  of 
the  assumption  of  liability  by  the  new  firm. 

There  is  a  second  exception  in  some  jurisdictions  to  the  rule  un- 
der consideration.  As  has  been  seen,  a  number  of  courts  hold  that 
an  incoming  partner,  by  assuming  debts  of  the  old  firm,  may  become 
liable  to  creditors,  although  he  has  not  contracted  with  them,  and 
although  the  old  firm  has  not  been  released.  In  these  jurisdictions, 
where  the  incoming  partner  has  become  liable  to  creditors  by  as- 
suming debts  of  the  old  firm,  he  may  be  joined  or  sued  separately, 
according  as  his  liability  is  joint  or  several.'" 

SAME— RETIREMENT  OF  OLD  MEMBER. 

160.  A  retired  partner  must  join  as  a  plaintiff  in  actions 
on  claims  due  the  old  firm  w^henever  such  joinder 
would  have  been  necessary  had  he  not  retired,  ex- 
cept 

EXCEPTIONS — (a)  Where  the  claim  has  been  assigned 
to  the  new  firm. 

(b)  Where,  by  consent  of  all  the  parties,  the  new  firm  is 
substituted  for  the  old  as  obligee. 

Regester  v.  Dodge,  19  Blatchf.  79,  6  Fed.  6;  Dodd  v.  Dreyfus,  57  How.  Prac. 
(N.  Y.)  319.  But  such  eubrogation  of  the  new  firm  must  be  accepted  by  the  cred- 
itor, to  release  the  retiring  member.  Hayes  v.  Knox,  41  Mich.  529,  2  N.  W.  670; 
Osbom  v.  Osborn,  36  Mich.  48. 

69  See  ante,  p.  252.  If  a  new  firm,  formed  from  an  old  firm  by  the  retirement  of 
a  member,  succeeds  to  and  continues  the  business  of  the  old  firm  in  the  same  place, 
slight  evidence  is  sufficient  to  warrant  the  inference  that  it  has  assumed  the  lia- 
bilities of  the  old  firm;  and,  if  it  has  assumed  such  liabilities,  a  partner  has  the 
same  right  to  give  partnership  notes  in  payment  of  them  as  he  has  to  give  such 
nptes  in  payment  of  the  debts  of  the  new  firm.    Shaw  v.  McGregory,  105  Mass.  96. 


382  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.    8 

161.  A  retired  partner  must  be  joined  as  a  defendant  in  an 

action  on  a  liability  of  the  old  firm  whenever  such 
joinder  would  have  been  necessary  had  he  not  re- 
tired, except 

EXCEPTIONS— (a)  Where,  by  consent  of  all  the  parties, 
the  new  firm  is  substituted  for  the  old  as  the  obli- 
gor. 

(b)  Where  the  new  firm  has  become  liable  to  creditors 
by  assuming  debts  of  the  old  firm. 

162.  Where  the  circumstances  are  not  such  that  the  retired 

partner  may  be  omitted,  the  action  must  be  brought 
by  or  against  the  partners  of  the  old  firm,  precise- 
ly as  though  no  change  had  occurred. 

Much  the  same  considerations  apply  to  the  case  of  the  retirement 
of  an  old  member  as  do  to  the  case  of  the  admission  of  a  new  one. 
The  change  operates  equally  as  the  dissolution  of  the  old  firm  and 
the  formation  of  a  new  one.  The  general  rule  is  that  a  retired  part- 
ner must  join  as  plaintiff  or  defendant  whenever  such  joinder  would 
have  been  necessary  had  he  not  retired.  The  exceptions  to  this  rule 
are  practically  the  converse  of  the  exceptions  to  the  rule  as  to  in- 
coming partners.  Thus,  where  the  claim  has  been  assigned  to  the 
new  firm,  or  where,  by  consent  of  all  the  parties  concerned,  the  new 
firm  is  substituted  for  the  old  as  obligee,  the  retired  partner  should 
not  join  as  plaintiff.  Under  similar  circumstances,  it  has  been  seen 
that  an  incoming  partner  should  join.  So,  where,  by  consent  of  all 
concerned,  the  new  firm  is  substituted  for  the  old  as  obligor,  and 
where  the  new  firm  has  become  liable  to  creditors  by  assuming  debts 
of  the  old  firm,  the  action  may  be  against  the  new  firm,  omitting  the 
retired  partner.  Where  the  circumstances  are  not  such  that  the 
retired  partner  may  be  omitted,  the  action  must  be  brought  by  or 
against  the  partners  of  the  old  firm,  precisely  as  though  no  change 
had  occurred.""* 

80  Lindl.  Partn.  p.  286;  Dobbin  v.  Foster,  1  Car.  &  K.  323.  See,  also,  ante,  p. 
379.  Where  one  member  of  an  insolvent  firm  sells  his  interest  with  the  agreement 
that  the  new  firm  shall  assume  the  debts  of  the  old.  the  assets  of  the  new  firm 
are  charged  in  equity  with  a  trust  for  the  payment  of  the  debts  of  the  old,  which 
may  be  enforced  by  a  creditor  of  the  old  firm  who  has  not  consented  to  accept  the 


§§    160-162)  RETIREMENT    OK    OLD    MEMBER.  383 

When  Change  im,  Firm  Diacharges  Contract. 

Although  a  change  in  a  firm,  whether  by  the  introduction  of  a 
new  partner  or  the  retirement  of  an  old  one,  cannot,  except  as  al- 
read}'  mentioned,  confer  upon  the  partners  any  new  right  of  action 
against  strangers,  or  vice  versa,  as  regards  what  may  have  occurred 
before  the  change  took  place,  it  may,  nevertheless,  operate  so  as 
to  discharge  a  person  from  a  contract  previously  entered  into  by 
him.  Thus,  a  person  who  is  surety  to  a  firm  is  discharged  from 
his  suretyship,  for  the  future,  by  a  change  among  its  members,  and 
cannot  therefore  be  sued  either  by  the  old  or  by  the  new  partners 
for  any  default  of  the  principal  debtor  occurring  subsequently  to 
the  change.'^  Again,  if  a  person  enters  into  a  contract  with  a 
firm,  and  that  contract  is  of  a  purely  personal  character,  to  be 
performed  by  the  individuals  who  have  entered  into  it,  and  not 
by  any  one  else,  a  change  in  the  firm  may  operate  as  a  dissolution 
of  the  contract,  so  that  neither  the  new  nor  the  old  partners  can 
sue  in  respect  of  any  alleged  breach  which  may  have  occurred  since 
the  change  took  place.  An  illustration  of  this  is  afforded  by  Rob- 
son  V.  Dnimmond.®*  In  that  case  A.  and  B.  were  pai'tners  as  coach- 
makers.  C,  who  knew  nothing  of  B.,  entered  into  a  contract  with 
A.  for  the  hire  of  a  carriage  for  five  years,  at  so  much  a  year,  and 
A.  undertook  to  keep  the  carriage  in  proper  order  for  the  whole  five 
years.  Before  the  five  years  were  out,  A.  and  B.  dissolved  partner- 
ship, and  A.  assigned  the  carriage  and  the  benefit  of  the  contract  re- 
lating to  it  to  B.  B.  gave  C.  notice  of  the  dissolution  and  arrange- 
ment respecting  the  carriage;  but  C.  declined  to  continue  the  con- 
tract with  B.,  imd  returned  the  carriage.  An  action  was  then  brought 
by  A.  and  B.  against  C,  for  not  performing  the  contract;  but  it 
was  held  that  the  action  would  not  lie,  the  contract  having  been 
with  A.  alone,  to  be  performed  by  him  personally,  and  he  having 
disabled  himself  from  continuing  to  perform  it  on  his  part.  In 
Stevens  v.  Benning,*'  the  same  principle  was  applied  to  a  contract 

new  firm  as  his  creditor  instead  of  the  old.     Thayer  v,  Humplirey,  01  Wis.  276,  G4 
N.  W.  1007. 
«i  See  ante,  p.  269. 

•  a  2  Barn.  &  Adol.  303.    Cf.  British  Waggon  Co.  v.  Lea,  r>  Q.  B.  Div.  149. 

•  8  1  Kay  Si  J.  ItJS,  6  De  Gex,  M.  &  G.  223.  See  Hole  v.  Bradbury,  12  Oh 
DiT.  886. 


384  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.  8 

between  an  author  and  a  firm  of  publishers;  and  it  was  held  that 
the  contract  was  one  of  a  personal  character,  and  that,  consequently, 
the  author  was  discharged  from  it  by  a  change  in  the  firm,  and 
an  assignment  of  the  benefit  of  the  contract  to  persons  of  whom  the 
author  knew  nothing. 

SAME— DEATH  OF  MEMBER. 

163.  After  the  death  of  a  member,  actions  on  partnership 
claims  or  obligations  must  be  brought  by  or  against 
the  surviving  partners,  and  ultimately  the  last  sur- 
vivor or  his  representatives. 

Where  a  partner  dies,  all  actions  in  respect  of  any  contract  en- 
tered into  by  or  on  behalf  of  the  firm  before  his  death  must  be 
brought  by  or  against  the  surviving  members  of  the  firm,  and  by 
or  against  them  alone.  The  representatives  of  the  deceased  part- 
ner can  neither  sue  nor  be  sued  at  law  in  respect  of  any  such  con- 
tract.®* So,  an  action  for  the  conversion  of  partnership  goods  must 
be  brought  by  the  surviving  partners.*"^  It  follows  that  the  last 
suniviug  partner,  or,  if  he  be  dead,  his  legal  personal  represent- 
ative, is  the  proper  person  to  sue  and  be  sued  at  law  in  respect  of 
the  debts  and  engagements  of  the  firm.°«     "These  rules,  however, 

64  Lindl.  Partn.  p.  289;  Dixon  v.  Hamond,  2  Barn.  &  Aid.  310;  Martin  v.  Crompe. 
1  Ld.  Raj  m.  340,  2  Salk.  444.  See  Buckley  v.  Barber,  6  Exch.  164,  178.  The  ad- 
miuistrator  of  a  deceased  partner  cannot  be  joined  with  the  surviving  partners,  as 
a  defendant,  in  an  action  on  the  obligations  of  the  firm.    Childs  v.  Hyde,  10  Iowa, 

294. 
6  6  Kemp  V.  Andrews,  Carth.  170.  But  see  Buckley  v.  Barber,  6  Exch.  164, 
8  6  Dicey,  Tarties,  p.  274,  rule  58;  Lindl.  Partn.  p.  289;  Richards  ▼.  Heather,  1 
Barn.  &  Aid.  29;  Calder  v.  Rutherford,  3  Brod.  &  B.  302.  "A  joint  contract  is 
made  by  X.,  Y.,  and  Z.  The  liability  to  be  sued  upon  the  contract  passes,  on  the 
death  of  Z.,  to  X.  and  Y.;  on  the  subsequent  death  of  Y.,  to  X.;  and,  on  the 
death  of  X.  (provided  the  liability  to  be  sued  survives),  to  X.'s  executor  or  adminis- 
trator. The  representatives,  e.  g.  of  Z.,  can  neither  be  sued  upon  the  contract 
themselves,  nor  be  sued  jointly  with  X.  and  Y.  A  person's  separate  liabiUty  on  any 
contract  passes,  of  course,  to  his  representatives.  If,  therefore,  X.,  Y.,  and  Z.  enter 
into  a  joint  and  several  contract,  and  Z.  die,  X.  and  Y.  may  be  sued  on  their  joint 
contract,  and  Z.'s  executor  may  be  sued  on  Z.'s  separate  contract.  In  other  words, 
a  joint  and  several  contract  by  X.  and  Y.  is,  in  effect,  three  contracts,— a  joint  con- 


§§    164-167)  BANKRUPTCY    AND   INSOLVENCY.  386 

can  be  no  longer  relied  upon,  except  where  the  obligation  sought 
to  be  enforced  is  joint  in  equity,  as  well  as  at  law.  Wherever  it  is 
several  as  well  as  joint,  an  action  may,  it  is  apprehended,  be  brought 
by  or  against  the  surviving  partners  and  the  executors  or  adminis- 
trators of  the  deceased  partner."  " 

On  the  death  pendente  lite  of  a  partner  plaintiff,  the  action  pro- 
ceeds without  amendment  upon  the  mere  suggestion  of  the  death; 
and  so,  in  case  of  the  death  of  a  partner  defendant  pendente  lite, 
the  liability  survives  against  the  survivors,  and  no  revivor  is  nec- 
essary." 

SAME— BANKRUPTCY  AND  INSOLVENCY. 

164.  Actions  on  firm  claims  must  be  brought 

(a)  On  the  insolvency  of  the  firm,  by  the  trustee  of  the 

bankrupts. 

(b)  On  the  bankruptcy  of  one  or  more  partners,  by  the 

solvent  partners,  together  v^rith  the  trustee  or  trus- 
tees of  the  bankrupt  partner  or  partners. 

166-  Mere  bankruptcy  or  insolvency  of  a  firm  or  its  mem- 
bers does  not,  previous  to  their  discharge,  aff'ect 
their  liability  on  firm  obligations. 

166.  After  discharge  of  the  firm  in   bankruptcy,  no  action 

can  be  maintained  against  the  partners  on  previous 
obligations  of  the  firm. 

167.  After  the  discharge  of  one  or  more  partners  in  bank- 

ruptcy, the  action  must  be  brought  against  the  sol- 
vent partner  or  partners. 

tract  by  X.  and  Y.,  a  separate  contract  by  X.,  and  a  separate  contract  by  Y." 
Dicey,  Parties,  p.  238. 

6T  Lindl.  Partn.  p.  288.  See,  also,  Dofe'gett  v.  Dill,  108  111.  5G0;  Nelson  v.  Hill,  5 
How.  (U.  S.)  127;  Blair  v.  Wood,  108  Pa.  St.  278;  Camp  v.  Grant,  21  Conn.  41; 
Manning  v.  Williams,  2  Mich.  105;  Pape  v.  Cole,  55  N.  Y.  124;  Sherman  v.  Kreul, 
42  Wis.  33;  Pearson  v.  Keedy,  6  B.  Men.  (Ky.)  128;  Pullen  v.  Whitfield,  55  Ga. 
174. 

6  8  Phoenix  Ins.  Co.  V.  Moog,  81  Ala.  335,  1  South.  108;  Gaines  v.  Beirne,  3  Ala. 
114;  Trov  Iron  &  Nail  Factory  t.  Winslow,  11  Blatchf.  513,  Fed.  Cas.  No.  14,19«; 
Townes  v.  Birchett,  12  Leigh  (Va.)  173;  Bowen  t.  MiU  Co.,  31  Iowa,  460;  Childa 
GEO.PART.— 25 


386  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  ^Ch.    8 

TVTiere  a  partnership   makes  an  assignment  for  the  benefit   of 
creditors,  or  is  forced  into  bankruptcy,  the  partnership  is  dissolved, 
and  its  affairs  must  be  wound  up.     In  such  case  the  assignee  or 
trustee  is  the  person  to  bring  actions  on  firm  claims.""     Where  one 
or  more  partners  become  bankrupt  or  make  an  assignment  for  the 
benefit  of  creditors  of  all  their  property,  including  their  intere^ 
in  the  partnership,  the  firm  is  likewise  dissolved;    and  actions  on 
firm  claims  should  thereafter  be  brought  by  the  solvent  partners, 
together  with  the  trustee  or  trustees  of  the  bankrupt  partner  or 
partners.''"     In  such  case  the  assignee  or  trustee  becomes  a  tenant 
in  common  with  the  solvent  partner  of  all  the  partnership  prop- 
erty."    The  mere  assignment  or  bankruptcy  of  a  firm  or  its  mem- 
bers does  not,  however,  affect  their  liability  on  firm  obligations. 
They  continue  liable  and  may  be  sued  until  such  obligations  are  dis- 
charged.^'     After  discharge  of  the  firm  in  bankruptcy,  no  action 
can  be  maintained  against  the  partners  on  previous  obligations  of 
the  firm,  unless  they  are  such  as  cannot  be  discharged  in  bank- 
ruptcy.^'    After  the  discharge  of  one  or  more  partners  in  bank- 
ruptcy, the  action  must  be  brought  against  the  solvent  partner  or 
partners.''*     "Tliere  is  no  remedy  by  action  against  a  trustee  in  re- 
spect of  the  bankrupt  whom  he  represents.     The  remedy  is  by  proof 
against  the  bankrupt's  estate."  " 

V.  Hyde,  10  Iowa,  294;    Dunman  v.  Ckjleman,  59  Tex.  199.    See,  also.  Sherman  v. 
Kreul,  42  Wis.  33;   Cragin  t.  Gardner,  64  Mich.  399,  31  N.  W.  206. 

8»  Liudl.  Partn.  p.  289.  See  Kay  v.  Davies,  8  Taunt.  134;  Stonehouse  y.  De 
Silva,  3  Camp.  399;   Hancocli  v.  Haywood,  3  Term  R.  433. 

70  Eclchardt  v.  Wilson,  8  Term  K.  140;  Thomason  v.  Frere,  10  East,  418;  Gra- 
ham V.  Robertson,  2  Term  R.  282;  Hetlbut  v.  Nevill,  L.  R.  4  C.  P.  354.  If  the  as- 
signees decline  to  join,  the  solvent  partners  were  entitled  to  make  use  of  their 
names  upon  indemnifying  them  against  the  costs  of  the  action.  Undl.  Partn.  p.  289: 
Whitehead  v.  Hughes,  2  Cromp.  &  M.  318;  Ex  parte  Owen,  13  Q.  B.  Div.  113.  An 
assignment  of  one  partner's  estate  under  the  insolvent  laws  does  not  prevent  all  the 
partners  from  maintaining  an  action  previously  commenced  on  a  debt  due  to  the 
partnership.    Cunningham  v.  Munroe,  15  Gray  (Mass.)  47L. 

71  Dicey,  Parties,  p.  160. 
7  2  Lindl.  Partn.  p.  289. 
73  Dicey,  Parties,  p.  273. 

7  4  Lindl.    Partn.  p.   290;     Dicey,    Parties,   p.   273;     Hawkins  ▼.   Ramsbottom,   d 

Taunt.  179. 
7  6  Dicey,  Parties,  p.  273. 


§    168)  DISQUALIFICATION    OF    ONE    PARTNER    TO    SUE.  387 


DISQUALIFICATION  OF  ONE  PARTNER  TO  SUE. 

168.  In  cases  -where  all  the  partners  must  join  as  plain- 
tiffs to  enforce  a  firm  claim,  if  one  of  the  partners 
is  disqualified  to  sue,  no  action  at  la"w  can  be  main- 
tained. 

It  has  been  seen  that  all  the  partners  must  join  in  an  action  on 
an  obligation  to  a  firm  because  it  is  in  law  an  obligation  to  all 
the  partners  jointly.^'  Whenever,  therefore,  one  partner  is  dis- 
qualified to  sue  upon  a  cause  of  action,  no  action  can  be  main- 
tained at  law  either  by  all  the  partners  jointly,  because  by  hypoth- 
esis one  is  disqualified,  or  by  the  other  partners,  because  all  must 
join.''^  The  rule  already  discussed  that  no  action  at  law  lies  upon 
a  claim  by  a  firm  against  one  of  its  members,  or  vice  versa,  is  an 
illustration  of  this  principle.  In  such  an  action  one  partner  would 
liave  to  be  joined  both  as  a  plaintiff  and  as  a  defendant,  and  a  per- 
son is  disqualified  to  sue  himself.^* 

So,  if  a  partnership  become  possessed  of  a  negotiable  security 
which  has  been  procured  by  one  partner  upon  the  understanding 
that  he  will  punctually  provide  for  the  payment  thereof  at  its 
maturity,  the  pai-tnership  cannot  sue  upon  such  security,  because 
the  same  partner  must  be  made  one  of  the  plaintiffs;  and,  as  it  is 
clear  in  such  a  case  that  he  could  not  maintain  any  suit  in  his  own 
name  thereon,  the  same  objections  will  avail  against  him  as  a  co- 
plaintilT.^®  So,  also,  a  partner  holding  a  security  of  the  finn  by 
indorsement  from  the  payee  or  other  indorser  cannot  sue  the  in- 
dorser  thereon.'" 

A  partnership  cannot  maintain  an  action  if  one  partner  is  an  alien 
enemy.  A  state  of  war  suspends  all  commercial  intercourse  between 
the  belligerents,  and  shuts  their  courts  against  all  suits  and  pro- 

7  6  See  ante,  p.  363. 

TT  Bates,  Partn.  §  1035  et  seq.  See,  also,  Cochran  t.  Cunningham's  Ex'r,  16 
Ala.  448;    Morse  v.  Bellows,  7  N.  H.  549;    Salmon  v.  Davis,  4  Bin.  (Pa.)  375. 

7  8  See  ante,  p.  300. 

T»  Story,  Partn.  §  237;  Sparrow  v.  Chisraan,  9  Barn.  &  C.  241,  See  Rich- 
mond V.  Heapy,  1  Starkie,  202. 

«o  Bailey  v.  Bancker,  3  Uill  (N,   Y.)  188. 


885  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.   8 

ceedings  and  all  claims  and  persons  who  have  acquired  and  retained 
a  hostile  character."* 

Perhaps  the  most  numerous  class  of  cases  where  this  doctrine  is 
invoked  is  where  one  partner  has  wrongfully  disposed  of  partnership 
property,  as  where  he  has  released  a  firm  debtor  or  used  firm  prop- 
erty in  the  payment  of  his  individual  debts,  and  the  firm  seeks  to 
recover  the  debt  or  the  property.  This  is  obviously  a  firm  claim, 
and  the  guilty  partner  is  a  necessary  co-plaintiff.  He  cannot  recover 
unless  he  is  allowed  to  repudiate  his  former  act,  and  unless  he  can 
recover  his  co-partners  cannot.  The  courts  have  hopelessly  dis- 
agreed in  their  application  of  the  doctrine  to  this  class  of  cases. 

In  considering  this  class  of  cases,  a  distinction  should  be  observed 
between  (1)  acts  of  the  partner  which,  though  wrongful,  are  yet  done 
within  the  course  of  the  partnership  business,  and  which  may  there- 
fore be  considered  as  the  acts  of  the  firm,  and  (2)  acts  wliich  are  not 
done  in  the  course  of  the  partnership  business,  but  which  are  wrongs 
to  the  other  partners. 

(1)  A  wrongful  act  done  by  one  partner  in  the  course  of  the  part- 
nership business  is  the  wrongful  act  of  the  finn,  and,  of  course,  no 
cause  of  action  in  favor  of  the  firm  can  arise  from  it.**  Thus,  fraud 
on  the  part  of  one  partner  in  procuring  a  note  is  available  as  a  de- 
fense to  an  action  thereon  by  all  the  partners  jointly,  i.  e.  by  the 
firm.*'  So,  where  one  partner  procures  goods  for  the  firm  by  false 
representations,  and  fraudulently  disposes  of  them,  all  the  partners 
are  jointly  liable.®*  Likewise,  a  release  of  a  firm  debt  by  one  partner 
is  ordinarily  the  act  of  the  firm."^ 

(2)  It  is  in  the  cases  where  a  partner  has  wrongfully  disposed  of 
partnership  property,  not  in  the  course  of  the  partnership  business, 
but  in  fraud  of  his  co-partners,  that  the  decisions  are  most  conflict- 
si  story,   Partn.  §  240;    McConnell  v.  Hector,  3  Bos.  &  P.  113;    Griswold   v. 

Waddington,  16  Johns.  (N.  Y.)  438. 

«2  But  as  between  themselves,  in  the  settlement  of  their  partnership  accounts,  the 
wrongdoing  partner  may  sometimes  be  solely  chargeable  with  whatever  damages 
arise  from  his  act. 

83  Kilgore  v.  Bruce  (Mass.)  44  N.  E.  lOS. 

84  Banner  v.  Schlessinger  (Mich.)  67  N.  W.  116. 

86  Dyer  v.  Sutherland,  75  111.  583;  Myrick  v.  Dame,  9  Gush.  (Mass.)  248; 
Cochran  v.  Cunningham's  Ex'r,  16  Ala.  448;  Salmon  v.  Davis,  4  Bin.  (Pa.)  375; 
Morse  v.  Bellows,  7  N.  H.  549. 


§    168)  DISQUALIFICATION    OF    ONE    PARTNER   TO   SUE.  389 

ing.  Two  classes  of  cases  may  be  considered :  (a)  \\Tiere  chattels, 
exclusive  of  money,  are  used,  and  (b)  where  money  is  used.  Each 
will  be  considered  separately.  Where  it  is  the  credit  of  the  firm 
that  is  used,  as  where  one  partner  uses  firm  paper  for  his  private  pur- 
poses, the  firm  can  defend  by  showing  that  the  paper  was  issued 
without  authority,  except,  of  course,  as  to  a  bona  fide  holder.  The 
rights  and  liabilities  of  the  parties  under  these  circumstances  have  al- 
ready been  discussed.®^ 

(a)  Where  firm  chattels  other  than  money  are  wrongfully  dis- 
posed of  by  one  partner,  various  opinions  are  held  as  to  the  possi- 
bility of  an  action  being  maintained  by  the  partners  jointly  for 
their  recovery. 

In  some  jurisdictions  it  is  held  squarely  that  the  guilty  partner 
cannot,  by  thus  joining  with  him  his  co-partners,  repudiate  his  own 
act,  but  that  his  disability  affects  all  the  partners,  and,  therefore,  that 
the  action  cannot  be  maintained.*'^  Jones  v.  Yates  *®  is  a  leading 
English  case  in  support  of  this  view.  In  that  case,  Sykes  and  Bury 
being  partners,  Sykes  fraudulently  gave  the  bills  of  the  partnership 
in  discharge  of  his  private  debt,  and  also  applied  part  of  the  partner- 
ship funds  to  the  same  purpose.  The  question  was  whether  the 
partners  Sykes  and  Bury  could  recover  in  a  joint  action  the  amount 
of  the  bills  and  of  the  money  in  a  court  of  law,  by  an  action  of  trover 
for  the  bills  of  assumpsit  for  the  money,  and  it  was  held  that  they 
could  not.  So,  it  has  been  held  in  this  country  that  if  one  mem- 
ber of  a  partnership  settles  a  demand  due  from  him  individually  by 
setting  off  and  discharging  a  demand  due  from  his  creditors  to  the 
partner,  although  this  is  a  fraud  upon  the  partnership,  no  action  at 
law  can  be  maintained  on  behalf  of  the  partnership  to  recover  the 
demand  due  it  from  such  creditor.*' 

8«  See  ante,  p.  226;   Bates,  Partn.  §  1036. 

8T  Church  V.  Bank,  87  111.  68  (cf.  Brewster  v.  Mott,  4  Scam.  [111.]  378);  Homer 
V.  Wood,  11  Cush.  (Mass.)  62;  Farley  v.  Lovell,  103  Mass.  387;  Craig  v.  Hulschiz- 
er,  34  N.  J.  Law,  303;  Weaver  v.  Rogers,  44  N.  H.  112;  Blodgett  v.  Sleeper,  67 
Me.  499.  One  who  cannot  sue  by  himself  cannot  do  so  merely  by  joining  others 
with  him.      Wallace  v.  Kelsall,  7  Mees.  &  W.  264,  per  Parke,  B. 

««  9  Barn.  &  C.  532. 

«»  In  Homer  v.  Wood,  11  Cush.  (Mass.)  62  (approved  in  Grover  v.  Smith,  165 
Mass.  132,  42  N.  E.  555),  the  court  limited  its  decision  to  the  precise  case  before 


390  ACTIONS    BETWEEN    PARTNERS    AND    THIRD    PERSONS.  (Ch.   8 

In  some  jurisdictions  it  is  held  just  as  squarely  that  the  part- 
ners can  maintain  an  action  to  recover  the  property.  Rogers  v. 
Batchelor  °°  is  the  leading  case  in  support  of  this  view.  Story,  J., 
said:  *1n  the  case  of  a  partner  paying  his  own  separate  debt  out 
of  the  partnership  funds,  it  is  manifest  that  it  is  a  violation  of  his 
duty  and  of  the  rights  of  his  partners  unless  they  have  assented. 
The  act  is  an  illegal  conversion  of  the  funds,  and  the  separate  cred- 
itor can  have  no  better  title  to  the  funds  than  the  partner  him- 
self had,"  The  court  further  held  that  it  made  no  difference  whether 
the  separate  creditor  had  knowledge  that  there  was  a  misappro- 
priation of  the  partnership  fund  or  not.  The  position  taken  was 
that,  if  he  had  such  knowledge,  he  would  be  guilty  of  gross  fraud, 
not  only  in  morals,  but  in  law;  but  that  knowledge  was  not  an  es- 
sential ingredient  in  the  case.  The  true  question  was  said  to  be 
whether  the  title  to  the  property  had  passed  from  the  partnership 
to  the  separate  creditor.  If  it  had  not,  then  the  partnership  might 
reassert  its  title  to  it  in  the  hands  of  such  creditor.  This  view  is 
followed  in  many  cases.'^  Viles  v.  Bangs®*  was  an  action  for 
the  value  of  goods  sold  to  defendant.  The  defense  was  that  the 
goods  had  been  taken  under  an  agreement  with  one  partner  in  pay- 
ment of  his  private  debt.  The  court  held  that  plaintiff  could  re 
cover.  The  court  said:  "A  recovery  can  only  be  defeated  by  the 
court  sustaining  this  appropriation  of  the  partnership  property; 
and,  by  giving  force  and  effect  to  the  settlement,  the  plaintiff  does 
not  trace  his  cause  of  action  through  the  wrongful  act  of  his  part- 
ner, but  the  defendants  claim  that  he  is  bound  by  it." 

In  some  jurisdictions  the  transaction  may  be  treated  as,  in  effect, 
a  sale,  and  the  separate  creditor  is  liable  to  the  firm  in  assumpsit 

it,  in  which  it  was  admitted  that  the  defendant  had  acted  in  good  faith  in  settling 
with  the  fraudulent  parties.  In  Grover  v.  Smith,  supra,  Holmes,  J.,  said  that  the 
good  faith  of  defendant  was  immaterial. 

8  0  12  Pet.  221, 

«i  Cotzhausen  v,  Judd,  43  Wis.  213;  Purdy  v.  Powers,  6  Pa.  St  492;  Forney 
V.  Adams,  74  Mo.  138;  Ackley  v.  Staehlin,  56  Mo.  558;  Thomas  v,  Pennrich,  28 
Ohio  St.  55;  Burwell  v,  Springfield,  15  Ala,  273;  Liberty  Sav.  Bank  v.  Campbell, 
75  Va.  534;   Johnson  v.  Crichton,  56  Md.  108. 

»2  36  Wis,  131;  Bstabrook  t.  Messersmith,  18  Wis,  545,  distinguished,  but 
doubted. 


§    168)  DISQUALIFICATION    OF    ONE    PARTNER    TO    SUE.  391 

for  the  value  of  the  goods.»»  The  doctrine  has  been  held  not  ap- 
plicable to  counterchiims.®*  T\Tiere  the  guilty  partner  is  not  a 
party,  as  where  the  suit  is  by  an  assignee  for  the  benefit  of  creditors, 
the  action  has  been  sustained.*'  So,  also,  the  disqualification  does 
not  affect  the  right  of  a  creditor  to  pursue  the  property.^^ 

Of  course,  the  defrauded  partners  cannot  maintain  an  action  at 
law  alone  against  either  the  guilty  partner  or  the  one  with  whom 
he  dealt.  The  damage,  being  a  joint  damage,  cannot  be  recovei-ed 
in  separate  actions.     The  remedy  i&  in  equity.®^ 

(b)  Where  the  property  wrongfully  disposed  of  by  one  partner  is 
money,  as  distinguished  from  other  chattels  of  the  firm,  the  title 
to  the  money,  nevertheJess,  passes,  and  cannot  be  recovered  by  the 
firm,  pro\ided  the  grantee  of  the  guilty  partner  acted  bona  fide. 
This  is  certainly  true  in  those  jurisdictions  where  it  is  held  even 
as  to  ordinary  chattels  that  they  cannot  be  recovered  by  the  firm, 
and  it  is  probably  true  in  all  jurisdictions.  Money  is  a  peculiar 
species  of  property,  and  even  a  thief  can  pass  title  to  it  to  an  in- 
nocent person."*  If  tlie  defendant  k:iew  the  partner  was  using  firm 
money,  the  ordinary  rule  applies;  and  it  can  be  recovered  or  not, 
according  to  the  view  taken  of  the  general  question.*" 

»8  Daniel  v.  Daniel.  9  B.  Mon.  (Ky.)  195.  Cf.  Grover  v.  Smith,  165  Mass.  132. 
-12  N.  E.  555.  And  see  Ackley  t.  Staehlin.  56  Mo.  558;  Forney  v.  Adams,  74  Mo. 
138;    Dob   v.  Halsey,  16  Johns.  (N.  Y.)  34. 

»*  Bates,  Partn.  §  lot.'.,  citing  Cornells  v.  Stanhoije,  14  R.  I.  97.  See,  also. 
Craig  V.  Hulschizer,  34  N.  J.  Law,  363. 

»B  Thomas  v.  Stetson,  62  Iowa.  537,  17  N.  W.  751;  Cotzhausen  v.  Judd,  43 
Wis.  213;    Thomas  v.  Pennrich,  28  Ohio  St  55. 

9  6  Bates,  Partn.  §  1045. 

»T  Miller  v.  Price,  20  Wis.  117;  Craig  v.  Hulschizer,  34  N.  J.  Law,  363;  Fenton 
V.  Block,  10  Mo.  App.  536.  See  ante,  p.  322.  See,  also,  Halstead  v.  Slicpard,  23 
Ala.  558;  Church  t.  Bank,  87  111.  68.  One  partner  cannot  maintain  an  action  at 
law  for  damages  again.st  a  vendee  for  partnership  goods  sold  him  by  a  co-partner 
in  fraud  of  plaintiff's  rights.     Reed  v.  Gould  (Mich.)  63  N.  W.  415. 

9  8  See  Bates,  Partn.  §  1048. 

•»  Foster  t.  Fifield,  29  Me.  136;  DavLi  t.  Smith,  27  Minn.  390,  7  N.  W.  731. 


392  ACTIONS    BETWEEN    PARTNERS   AND    THIRD    PERSONS.  (Ch.   8 


ACTION  IN  FIRM  NAME. 

169.  In  many  jurisdictions  actions  in  the  firm  name  are 
authorized  by  statute,  either  generally  or  \^here 
the  names  of  the  mem.bers  are  unknown  at  the 
time  the  action  is  commenced. 

It  has  been  seen  that,  in  the  absence  of  statute,  actions  must  be 
brought  by  and  against  the  partners  as  individuals.  In  England 
and  in  many  of  the  states  of  this  country,  suits  in  the  firm  name  are 
now  authorized  by  statute,  either  generally  or  in  cases  where  the 
names  of  the  members  are  unknown.^"*'  These  statutes  are  not 
mandatory,  but  are  optional,  and  the  partners  may  be  sued  in  their 
individual  names.  The  statutes,  being  remedial,  should  be  liberally 
construed.  The  following  observations  by  Sir  Frederick  Pollock  as 
to  the  effect  of  the  English  statutes,  are  in  the  main  applicable  to 
the  American  statutes:  "These  rules,  it  will  be  observed,  do  not 
introduce  anything  that  amounts  to  the  recognition  of  the  finu  as 
an  artificial  person,  distinct  from  its  members.  They  allow  the 
name  of  the  firm  to  be  used  for  the  purpose  of  making  procedure 
quicker  and  easier;  and  creditors  of  a  firm  have  now  the  great 
practical  convenience  of  being  able  to  pursue  their  claims,  even  to 
judgment,  without  first  ascertaining  who  all  the  partners  are.  The 
substantive  results,  however,  are  the  same  as  under  the  former 
practice.  Actions  between  a  firm  and  one  of  its  own  members,  or 
between  two  firms  having  a  common  member,  which  are  allowed  by 
the  law  of  Scotland,  remain,  it  is  conceived,  inadmissible  in  Eng- 
land; and  a  judgment  against  a  firm  has  precisely  the  same  effect 
that  a  judgment  against  all  the  partners  had  formerly."  ^°^ 

100  See  Bates,  Partn.  §  1059  et  seq.  Suits  may  be  brought  either  against  a 
partnership  as  such,  or  against  all  the  individuals  members  thereof,  or  against 
any  or  either  of  them.  IOWA:  McClain's  Code  1888,  §  3758.  NEW  MEXICO: 
Comp.  Laws  1884,  §  1886.  There  can  be  no  such  thing  as  a  partnership  with 
but  one  partner,  and  therefore  a  statute  authorizing  actions  by  a  firm  to  be  brought 
in  the  firm  name  does  not  authorize  an  action  by  an  individual  in  a  name  indicat- 
ing a  partnership  which  really  does  not  exist,  but  under  which  he  does  business. 
Stirling  v.  Heintzman,  42  Mich.  449,  4  N.  W.  165. 

101  Pol.  Partn.  p.  121. 


§    170)  DISSOLUTION.  893 

CHAPTER  IX. 

DISSOLUTION. 

170.  Causes  of  Dissolution— Partnership  for  a  Definite  lime. 

171.  Partnership  for  an  Indefinite  Time. 

172.  Causes  Subject  to  Stipulation. 

(a)  Death  of  Partner. 

(b)  Alienation  of  Partner's  Share. 

(c)  Bankruptcy  of  Partner. 

(d)  Marriage  of  a  Feme  Sole  Partner. 

173.  Expulsion. 

174.  Causes  not  Subject  to  Stipulation. 

(a)  Events  Rendering  Business  Unlawful. 

(b)  Bankruptcy  of  the  Firm. 

175.  Causes  for  which  a  Court  will  Decree  a  Dissolution. 

(a)  Insanity  or  Other  Incompetency  of  a  Partner. 

(b)  Misconduct  of  a  Partner. 

(c)  Impossibility  of  Making  Profit. 

176.  Consequences  of  Dissolution — As  to  Third  I'ersons. 

177.  As  to  the  Partners. 

178.  Winding  Up  Business. 

179.  Notice  of  Dissolution. 

180.  Sale  of  Good  Will. 

181.  Payment  of  Firm  Debts. 

182.  Earnings  after  Dissolution. 

183.  Disposition  of  Surplus  Property.    - 

CAUSES  OF  DISSOLUTION— PARTNERSHIP  FOR  A  DEFINITE 

TIME. 

170.  When  a  partnership  has  been  created  for  a  definite 
term,  one  partner  cannot  terminate  the  relation 
"writhoTit  the  consent  of  his  co-partners. 

The  question  as  to  when  and  how  the  dissolution  of  a  partner- 
Bhip  takes  place  depends,  first,  upon  what,  if  any,  arrangement  the 
partners  have  made  looldng  to  that  consummation.  They  may 
have  agreed  among  themselves  that  the  relation  shall  exist  for  a 
certain  time  named,  or  shall  cease  to  exist  upon  the  arrival  of  some 
certain  day  named.      In  that  case  the  dissolution  takes  place  ac 


394  DISSOLUTION.  (Ch.  9 

cordinglj,  unless  it  shall  have  taken  place  before  on  account  of 
some  event,  unprovided  for  bj  the  partners,  that,  under  the  law,  is 
cause  for  its  dissolution;  but  a  partner  has  no  right,  out  of  mere  ca- 
price, to  bring  the  relation  to  a  close, ^  although  he  can  when  he  and 

1  In  Solumon  v.  Kiikw  ood,  Go  Micli.  2M,  259,  21  N.  W.  33G,  337,  Cooley,  C.  J., 
says:  "We  think  the  judge  committed  no  error  in  his  instructions  respecting  the 
dissolution  of  the  partnership.  The  rule  ou  this  subject  is  thus  stated  in  an  early 
New  York  case:  The  right  of  a  partner  to  dissolve,  it  is  said,  'is  a  right  inseparably 
incident  to  every  partnership.  There  can  be  no  such  thing  as  an  indissoluble  part- 
nership. Every  partner  has  an  indefeasible  right  to  dissolve  the  partnership  as  to 
all  future  contracts  by  publishing  his  own  volition  to  that  effect;  and,  after  such 
publication,  the  other  members  of  the  tirm  have  no  capacity  to  bind  him  by  any 
contract.  Even  where  partners  covenant  with  each  other  that  the  partnership  shall 
continue  seven  years,  either  partner  may  dissolve  it  the  next  day,  by  proclaiming 
his  determination  for  that  purpose;  the  only  consequence  being  that  he  thereby 
subjects  himself  to  a  claim  for  damages  for  a  breach  of  his  covenant.  The  power 
given  by  one  partner  to  another  to  make  joint  contracts  for  them  both  is  not  only  a 
revocable  power,  but  a  man  can  do  no  act  to  divest  himself  of  the  capacity  to  re- 
voke it.'  Skinner  v.  Dayton,  19  Johns.  <N.  Y.)  513,  538.  To  the  same  effect  are 
Mason  v.  Connell,  1  Whart.  (Pa.)  381,  and  Slemmer's  Appeal,  58  Pa.  St.  155. 
There  may  be  cases  in  which  equity  would  enjoin  a  dissolution  for  a  time,  when  the 
circumstances  were  such  as  to  make  it  specially  injurious;  but  no  question  of  equi- 
table restraint  arises  here.  When  one  partner  becomes  dissatisfied,  there  is  com- 
monly no  legal  policy  to  be  subserved  by  compelling  a  continuance  of  the  relation; 
and  the  fact  that  a  contract  will  be  broken  by  the  dissolution  is  no  argument 
against  the  right  to  dissolve.  Most  contracts  may  be  broken  at  pleasure,  subject, 
however,  to  responsibility  in  damages;  and  that  responsibility  would  exist  in 
breaking  a  contract  of  partnership  as  in  other  cases."  Although  a  partnership  has 
been  created  for  a  definite  term,  the  partners  may,  nevertheless,  terminate  the 
relation  by  mutual  consent  before  that  time  has  expired.  Richardson  v.  Gregory, 
126  111.  166,  18  N.  E.  777;  Bank  of  Montreal  v.  Page,  98  111.  109.  An  agreement 
by  the  partners  to  dissolve  may  be  implied  from  an  abandonment  of  the  undertak- 
ing. Ligare  v.  Peacock,  109  111.  94;  Harris  v.  Ilillegass,  54  Cal.  403.  But  cf.  God- 
dard  v.  Pratt,  16  Pick.  (Mass.)  412,  433.  A  dispute  having  arisen  between  part- 
ners as  to  the  construction  of  a  provision  in  the  partnership  articles,  a  memorandum 
was  executed,  reciting  that  written  notice  of  the  termination  of  the  partnership  was 
waived  by  both  parties,  and  that  the  firm  property  should  be  divided  in  a  certain 
way  between  the  parties.  In  an  action  for  an  accounting,  both  parties  alleged  the 
termination  of  the  partnership  as  of  the  date  of  said  memorandum.  Held  that,  as 
both  parties  considered  the  partnership  terminated  by  the  execution  of  said  mem- 
orandum, the  provisions  of  the  latter  as  to  the  distribution  of  the  firm  property  were 
binding  on  them  also.  (59  III.  App.  28,  affirmed.)  McKee  v.  Gowle-s,  161  III.  201, 
43  N.  E.  785.      In  a  partnership  for  a  definite  time,  any  partner  may  terminate  the 


§    i71)  PARTNERSHIP    FOR    AN    INDEFIMTP:    TIME.  395 

his  co-partners  have  not  so  agreed  as  to  the  term.  Taking,  now,  the 
first  case,  this  much  can  be  said  with  certainty:  that,  when  there 
is  a  specific  agreement  between  the  partners  defining  the  term  of 
the  relation,  the  partnership  is  dissolved  at  the  expiration  of  the 
terra  named.  When  the  partners  have,  by  theii*  so  stipulating  with 
each  other,  agreed  upon  some  certain  time  for  the  relation  to  ter- 
minate, the  partnership  is  dissolved  by  the  expiration  of  that  time.^* 
It  requires  no  act  on  the  part  of  the  firm,  or  any  of  the  partners,  in 
such  a  case,  to  make  the  fact  of  dissolution  complete;  for,  although 
there  may  be  no  settlement  or  accounting  then,  and  no  steps  at  all 
are  taken  in  recognition  of  the  arrival  of  the  day  previously  agreed 
upon  for  the  relation  to  come  to  an  end,  the  firm  is  dissolved.  The 
partners  may  proceed,  if  they  choose  to  do  so,  with  the  business,  ap 
parently,  just  as  it  was  before;  but,  in  spite  of  them,  their  associa 
tion  is  a  new  partnership. 


SAME— PARTNERSHIP  FOR  AN  INDEFINITE  TIME. 

171.  When  a  partnership  has  been  created  for  an  indefi- 
nite period,  it  may  be  dissolved  at  any  time  by  no- 
tice by  one  partner,  by  his  assignment  for  the  ben- 
efit of  creditors,  or  by  his  bankruptcy. 

When  there  is  no  specific  agreement  among  the  partners  defining 
the  term  of  the  relation,  the  partnership  is  one  at  will;*  that  is, 
in  such  case  it  is  at  the  pleasure  of  any  one  of  the  partners  to  dis 

power  of  his  co-partners  to  bind  him  by  contracts,  by  giving  notice  of  dissolution, 
although  by  so  doing  he  may  become  hable  to  damages  for  his  breach  of  partner- 
ship agreement.  Solomon  v.  Kirkwood,  55  Mich.  25G,  21  N.  W.  y^G;  Blake  v. 
Dorgau,  1  G.  Greene  (Iowa)  537. 

3  1  Colly.  Partn.  §  105.  A  partnership  is  dissolved  by  the  completion  of  the 
business  contemplated.  Bohrer  v.  Drake,  33  Minn.  408,  23  N.  W.  840.  Where  a 
commercial  partnership  expires  by  limitation,  and  the  business  is  continued  as  be- 
fore, the  partners  are  bound  inter  se,  and  to  third  persons,  as  if  articles  had  been 
executed,  and  the  relation  can  be  terminated  only  after  notice.  Jurgens  v.  itt- 
mann,  47  La.  Ann.  307,  16  South.  052. 

*  As  to  what  will  constitute  a  partnership  at  will,  see  I'earce  v.  Ham,  113  U.  S. 
585,  5  Sup.  Ct.  070;  Wnlker  v.  Whipple,  58  Mich.  470,  25  x\.  W.  472;  Cole  v. 
Moxley,  12  \V.  Va.  730;    Ui(;hards  v.  Baurman,  65  N.  C.  102. 


396  DISSOLUTION.  (Ch.  9 

solve  the  partnership.'  He  need  only  to  give  the  others  notice  of 
dissolution,  and  the  partnership  is  dissolved  ipso  facto.*  Again, 
if  any  partner  in  a  partnership  at  will  makes  an  assignment  for  the 
benefit  of  his  creditors,  or  is  adjudicated  bankrupt,  and  a  trustee 
is  appointed,  this  also  dissolves  the  relation,^  although  it  would 
be  otherwise  in  the  case  of  a  partnership  other  than  one  at  will. 
"If  a  member  of  an  ordinary  partnership  assigns,  where  the  part- 
nership is  at  will,  the  assignment  dissolves  it."  • 

SAME— CAUSES  SUBJECT  TO  STIPULATION. 

172.  The  partners  may  provide  in  their  articles  that  the 
follo\i7ing  causes  shall  not  cause  a  dissolution  of  the 
partnership,  as  they  w^ould  in  the  absence  of  such 
a  stipulation: 

(a)  Death  of  a  partner  (p.  397). 

(b)  Alienation  of  a  partner's  share  (p.  397). 

(c)  Bankruptcy  of  a  partner  (p.  399). 

(d)  Marriage  of  a  feme  sole  partner  (p.  401), 

There  are  other  things  that  cause  the  partnership  to  dissolve  in 
se  equally  of  a  firm  established  to  exist  for  a  stated  time  and  one 
established  to  exist  at  the  will  of  the  parties.  In  all  cases,  without 
regard  to  whether  there  is  a  specific  agreement  defining  the  term 
of  the  relation,  dissolution  may  come  through  the  happening  of  some 
other  event.  Such  an  effect,  as  to  some  of  these  events,  may,  to  be 
sure,  be  provided  against  in  the  articles,  so  that,  although,  in  strict- 
ness, the  event  does  bring  about  a  dissolution,   the  partners  are 

8  McElvey  v.  Lewis,  76  N.  Y,  373;  Fletcher  v.  Reed,  131  Mass.  312;  McMahon 
V.  McClernan,  10  W.  Va.  419.  A  partner  of  a  firm  formed  for  an  indefinite  time 
may  withdraw  when  he  pleases,  and  dissolve  the  partnership,  if  he  acts  without  any 
fraudulent  purpose,  and  he  will  not  be  liable  to  his  co-partners  for  damages  for  his 
withdrawal.  Fletcher  v.  Reed,  131  Mass.  312;  Walker  v.  Whipple,  58  Mich.  476, 
25  N.  W.  472;  Skinner  v.  Tinker,  34  Barb.  (N.  Y.)  333;  Carlton  v.  Cummins,  51 
Ind.  478;  Howell  v.  Harvey,  5  Ark.  270,  280;  Featherstonbaugh  t.  Fenwick,  17 
Ves.  208. 

«  Blake  t.  Sweeting,  121  111.  67,  12  N.  E.  67;  Eagle  t.  Bucher,  6  Ohio  St.  295; 
Wheeler  v.  Van  Wart,  9  Sim.  193;   Van  Sandan  v.  Moore,  1  Russ.  441,  464. 

7  See  post,  pp.  399,  403. 

8  Kiddle  V.  Whitehill,  135  U.  S.  G21,  G32,  10  Sup.  Ct.  924. 


§    172)  CAUSES    SUBJECT    TO    STIPULATION.  397 

bound  mutually,  so  that  the  business  proceeds,  notwithstanding  the 
actual  changes  involved  in  the  events  referred  to.  Thus  Collyer 
says:  *  "As  the  law  has  permitted  the  partners  to  limit  the  duration 
of  the  contract,  so  it  has  allowed  them  to  qualify  the  causes  of  its 
dissolution." 

Death  of  a  Partner, 

In  the  case  of  a  partnership  formed  to  exist  for  a  great  number 
of  years,  it  is  frequently  provided  in  the  articles  that,  upon  the 
death  of  a  partner  occurring,  the  legatees  or  executors  of  the  de- 
cedent may  assume  the  latter's  share,  and  carry  on  the  business  in 
conjunction  with  the  other  partners.  Such  provisions  the  law  will 
enforce.^" 

Alienation  of  a  Partner'' b  Share — Actual  Transfer. 

It  has  been  shown  before  ^^  that  one  of  the  leading  principles  of 
the  law  of  partnership  is  that  of  delectus  personae,  which  suggests 

•  Colly.  I'artn.  §  105. 

10  Scholefield  t.  Eichelberger,  7  Pet.  586;  Burwell  t.  Cawood,  2  How.  560; 
Walker  v.  Wait,  50  Vt.  668;  McNeish  v.  Oat  Co.,  67  Vt.  316;  Goodburn  v. 
Stevens,  5  Gill  (Md.)  1.  The  death  of  a  partner  causes  a  dissolution  of  the  firm, 
notwithstanding  a  provision  in  the  articles  for  the  continuance  of  the  partnershii) 
for  a  fixed  period.  Hoard  t.  Clum,  31  Minn.  186,  17  N.  W.  275.  A  contract  of 
service  made  with  a  firm  is  not,  as  a  matter  of  law,  terminated  by  the  death  of  a 
partner,  where  the  business  is  thereafter  continued  as  before.  Hughes  v.  Gross 
(Mass.)  43  N.  E.  1031.  See,  also,  Needham  v.  Wright,  140  Ind.  190,  39  N.  E.  510; 
Rand  v.  Wright,  141  Ind.  226,  39  N.  E.  447;  Navigation  Co.  v.  Warriner,  35  Fla. 
197,  16  South.  898;  Hannegan  v.  Roth,  12  Wash.  65,  40  Pac.  636.  An  agreement, 
in  co-partucrship  articles,  that  upon  the  death  of  any  member  his  heirs  or  legal 
representatives  shall  occupy  the  same  place  in  the  co-partnership  as  was  occupied  by 
such  partner,  will  prevent  a  dissolution  by  the  death  of  a  partner.  Rand  v.  Wright, 
x41  Ind.  226,  39  N.  E.  447.  An  agreement,  in  partnership  articles,  that  upon  the 
death  of  any  partner  his  heirs  or  legal  representatives  shall  occupy  his  place  in  the 
partnership,  controls  only  the  property  of  the  deceased  which  is  in  the  firm  at  the 
time  of  his  death.  Rand  v.  Wright,  supra.  A  stipulation  that  the  death  of  a  part- 
ner shall  not  operate  as  a  dissolution  of  the  association,  but  that  the  decedent's 
shares  shall  thereupon  vest  in  his  executors,  or  administrators,  or  devisees  of  the 
stock,  who  shall  succeed  as  in  case  of  transfer  on  the  books,  in  which  case  the  as- 
signee of  stock  is  made  subject  to  the  rights  and  obligations  of  the  original  owner 
thereof,  does  not  compel  an  executor  of  the  deceased  partner  to  accept  the  stock 
of  his  testator,  so  as  to  charge  the  decedent's  general  estate  with  firm  debts 
contracted  after  his  death.    Wilcox  v.  Derickson,  168  Pa.  St.  331,  31  AtL  1080. 

11  Ante,  p.  74. 


398  DissoLUTJOxN'.  (Ch.  9^ 

the  right  enjoyed  by  each  partner  to  have  a  choice  submitted  to  him 
as  to  who  shall  be  his  associates  in  the  business/-  If  a  partner 
had  the  right  to  assign  his  share  to  a  stranger,  and  have  that  stran- 
ger assume  the  place  of  his  assignor  in  the  firm,  without  the  con- 
sent of  the  other  partners  being  first  obtained,  seeds  of  discomfort 
acd  disagreement  among  the  members  of  the  firm  would  be  sown 
necessarily;  and  so  the  law  protects  the  partners  against  having  a 
stranger  thus  thrust  upon  them.^^  ''^'^here  the  partnership  is  at 
will,  an  assignment,  and  notice  thereof,  must,  it  is  conceived,  oper- 
ate as  a  dissolution.  But  where  the  partnership  is  for  a  definite 
period,  which  is  not  expired,  there  is  more  difficulty  in  arriving 
at  a  conclusion.  To  hold  that  the  assignment  operates  as  a  dis- 
solution renders  it  competent  for  a  partner  to  do  indirectly  what 
he  cannot  do  directly,  viz.  dissolve  before  the  expiration  of  the  time 
for  which  the  partnership  was  entered  into.  On  the  other  hand, 
to  hold  that  the  partnership  continues  is  not  just  to  the  assignor's 
co-partners.  The  assignment  does  not,  of  itself,  create  a  partner- 
ship between  them  and  the  assignee;  but  it  does  deprive  the  as- 
signor of  all  his  interests  in  the  concern,  and  his  co-partners  may 
fairly  urge  that  they  never  contemplated  a  partnership  with  a 
person  having  no  interest  in  it.  It  seems  to  be  impossible,  there 
fore,  to  deny  their  right  to  make  the  assignment  a  ground  for  dis- 
solution." ^*  Thus  it  appears  that  it  is  at  the  option  of  the  part- 
uer,  other  than  the  assignor,  to  rnake  the  assignment  a  cause  for 
dissolution,  when  the  partnership  is  one  stipulated  to  endure  for  a  . 
fixed  term.  However,  by  further  stipulation  in  the  articles,  the 
partners  may  expressly  deprive  themselves  of  this  option,  so  that 
virtually  the  assignment  of  a  share  does  not  either  dissolve  the 
partnership  ipso  facto  or  afford  a  cause  for  dissolution.      But  disso 

I-  When  the  delectus  personarum  does  not  exist,  the  partnership  is  not  dissolved 
by  the  transfer  of  a  partner's  interest.  Kahn  v.  Smelting  Ck).,  102  U.  S.  641;  Ma- 
chinists' Nat.  Bank  v.  Dean,  124  Mass.  81;   Gaylor  v.  Castle,  42  Cal.  367. 

13  Fourth  Nat.  Bank  v.  CarroUton  R.  Co.,  11  Wall.  624;  McCall  v.  Moss,  112  111. 
it)3;  Horton's  Appeal,  13  Pa.  St.  67;  Cochran  v.  Perry,  8  Watts  &  S.  (.Pa.)  262; 
Merrick  v.  Brainard,  38  Barb.  (N.  Y.)  574;  Mudd  v.  Bast,  34  Mo.  465:  Barkley  v. 
Tapp,  87  Ind.  25. 

!•»  2  Lindl.  Partn.  584,  citing  Jefferys  v.  Smith,  3  Russ.  158;  Marquand  v.  Presi- 
dent, etc.,  17  Johns.  (N.  Y.)  52,'3;  Glyn  v.  Hood,  1  Giff.  328;  Pinkett  v.  Wright,  2 
Hare,  120;   Murray  v.  Pinkett,  12  Clark.  &  F.  764. 


§    172)  CAUSES    SUBJECT   TO    STIPULATION.  899 

lution  does  not  result  from  the  alienation  of  anything  less  than  the 
whole  of  a  partner's  share;  for  by  transferring  a  mere  portion,  no 
matter  how  large,  of  his  share,  the  partner  does  not  withdraw  from 
the  firm.^' 

Same — Agreement  to  Hold  in  Trust  for  a  Stranger. 

Whether  or  not  such  an  agreement  could  dissolve  the  partnership 
is  a  question  that  has  never  been  determined,  Lindley  says;  but  he 
thinks  that,  inasmuch  as  the  cestui  que  trust  does  not  become  a 
partner,  the  co-partners  are  entitled  to  a  dissolution  upon  notice 
of  the  trust  being  brought  to  them.^' 

Bankruptcy  of  a  Partner. 

In  the  text  of  Col  Iyer  on  Partnership,*'  bankruptcy  is  given  as 
an  instance  of  one  of  the  causes  of  dissolution  that  the  partners  by 
agreement  cannot  modify  the  effect  of.  But  in  a  footnote  it  is 
ventured  as  an  opinion  that  an  agreement  "that,  if  any  of  the  part- 
ners shall  become  bankrupt,  the  partnership  shall  be  nevertheless 
continued  after  the  allowance  of  his  certificate,"  would  be  good. 
Lindley  says  that  it  was  decided  in  one  case*'  that  a  stipulation 
in  the  articles  of  partnerehip  to  the  effect  that,  on  the  bankruptcy 
of  one  of  the  partners,  his  share  should  be  taken  by  the  other  at  a 
valuation,  was  not  binding  on  the  assignee;  but  he  adds:  "But  the 
circumstances  of  the  case  were  somewhat  peculiar,  and  there  seems 
no  reason  why  such  a  stipulation  should  be  ineffectual."  *'  In  the 
case  of  a  partnership  at  will  the  adjudication  would  necessarily 
dissolve  the  relation.^"      But  in  a  case  where  such  an  adjudica- 

1 5  Burnett  v.  Snyder,  76  N.  Y.  344. 

18  2  Lindl.  Partn.  5S4,  citing  Jefferys  v.  Smith,  3  Russ.  158;  Newry,  etc.,  R.  Co. 
V.  Moss,  14  Beav.  04;  Bugg's  Case,  2  Drew.  &  S.  452;  Goddard  v.  Hodges,  1 
Cromp.  &  M.  33  (contra).  In  2  Bates,  Partn.  §  586,  the  rule  is  stated  the  other 
way,  and  the  following  cases  cited:  Bentley  v.  Bates,  4  Younge  &  C.  182,  190; 
Monroe  V.  Hamilton,  60  Ala.  226;  Du  Pont  v.  McLaran,  61  Mo.  502;  State  v. 
Quick,  10  Iowa,  451;  Receivers  of  Mechanics'  Bank  v,  Godwin,  5  N.  J.  Eq.  334; 
Moore  t.  Knott,  12  Or.  260,  266,  7  Pac.  57;  Bank  of  State  of  North  Carolina  v. 
Fowle,  4  Jones,  Eq.  (N.  C.)  8. 

17  3d  Am.  Ed.  (1848)  §  101. 

18  Wilson  V.  Greenwood,  1  Swanst.  471. 
i»  Lindl.  Partn.  647. 

2  0  Riddle  T.  Whitehill,  135  U.  S.  621,  632,  10  Sup.  Ct.  924;    Willdns  t.  Davis,  15 


400  DISSOLUTION.  (Ch.  9 

tion  is  made  before  the  end  of  the  term  stipulated  by  the  partners 
for  the  partnership  to  exist,  there  seems  to  be  no  reason  for  an  in- 
fallible rule  to  the  same  effect;  and  this  notwithstanding  that  the 
result  of  the  adjudication  is  that  the  assignee  becomes  tenant  in 
common  with  the  solvent  partners  of  an  undivided  moiety  of  the 
partnership  effects,  subject  to  the  partnership  accounts.'^ ^  We  have 
seen  that  an  assignment  of  his  share  by  a  partner,  when  a  status  of 
insolvency  or  bankruptcy  is  not  involved,  does  not  in  all  cases  dis- 
solve the  partnership  ipso  facto,  but  merely  gives  a  right  to  have 
the  relation  dissolved,  or,  in  other  words,  a  right  to  an  account  "VMiy 
should  bankruptcy  work  a  more  summary  dissolution  than  the  volun- 
tary acts  of  the  partners?  In  the  case  of  Fourth  Nat.  Bank  of  New 
York  V.  New  Orleans  &  C.  R.  Co.,"  Strong,  J.,  speaks  of  all  modes 
of  alienation  as  equally  conferring  rights  upon  the  alienee.  What 
would  appear  to  be  the  better  rule  on  this  subject  is  that  laid  down 
in  Riddle  v.  Whitehill:"  "If  a  member  of  an  ordinary  partnership 
assigns  where  the  partnership  is  at  will,  the  assignment  dissolves 
it,  and  if  it  is  not  at  will  the  assignment  may  be  treated  by  the 
other  members  of  the  concern  as  a  cause  for  dissolution.  The  as- 
signee of  one  partner  cannot  be  made  a  member  of  the  partnership 
against  the  will  of  the  other  partners,  but  the  absolute  right  to 
have  the  affairs  of  the  firm  at  once  wound  up,  when  the  specified 
duration  of  the  partnership  had  not  yet  expired,  may  be  subject 
to  modification  according  to  circumstances."  In  any  ease  a  bank 
ruptcy  or  insolvency  of  a  partner  that  becomes  cause  for  a  dissolu 
tion  does  not  consist  in  the  partner  merely  being  unable  to  pay  his 
debts.  There  must  be  something  in  the  nature  of  an  assignment, 
either  voluntary  or  involuntary,  making  the  partner  bankrupt  by 
virtue  of  some  act  or  proceeding  undertaken  for  that  purpose.^*  But 
even  that  would  not  dissolve  the  partnership  against  the  will  of  the 

N.  B.  R.  GO,  Fed.  Cas.  No.  17,6G4;  Marquand  v.  President,  etc.,  17  Johns.  (N.  Y.) 
525;   Galcott  v.  Dudley,  4  Scam.  427;   BlackweU  v.  Clay  well,  75  N.  C.  213. 

21  West  V.  Skip,  1  Ves.  Sr.  239,  242. 

2  2  11  Wall.  024. 

2  3  135  U.  S.  621,  632,  10  Sup.  Ct.  924. 

24  Arnold  v.  Brown,  24  Pick.  (Mass.)  89;  President,  etc..  Mechanics'  Bank  ▼. 
Oildreth,  9  Gush.  (Mass.)  356. 


§   173)  EXPULSION,  .  401 

co-partners,  if  the  proceeding  was  undertaken  merely  for  the  pur- 
pose of  dissolving  the  firm,  and  without  real  cause  otherwise." 

Marriage  of  a  Feme  Sole  Partner. 

Such  a  marriage,  since  husband  and  wife  are  one,  would  have  the 
same  effect,  technically,  at  common  law,  as  the  assignment  of  a  part- 
ners share;  a  new  person  being  presented  to  the  co-partners  with- 
out their  assent  being  first  asked  to  his  coming  into  the  firm.  Hence 
the  marriage  of  a  feme  sole  partner  was,  in  England,  before  the  mar- 
ried women's  act  (1882),  held  to  be,  just  as  the  assignment  of  a 
share  was,  cause  for  dissolution.^'  In  this  country,  whether  the 
marriage  would  or  would  not  have  this  effect  would  depend  upon 
the  laws  of  the  state  in  which  the  partners  reside.^^  All  that  has 
been  said  above  has  reference  to  a  marriage  to  a  stranger  to  a  firm. 
The  intermarriage  of  two  persons  composing  a  firm  dissolves  the 
partnership,  for  the  reason  that  the  two  become  then  one  in  law, 
and  a  partnership  composed  of  one  partner  would  be  an  anomaly.*' 
There  seems  to  be  no  reason,  in  states  where  the  marriage  of  a  feme 
sole  partner  dissolves  the  partnership,  why  it  may  not  be  provided 
that  such  a  marriage  shall  not  have  that  efifect. 

173.  EXPULSION — The  partners  may  stipulate  in  their 
articles  that  a  majority  may  expel  any  partner, 
under  certain  restrictions,  for  misconduct. 

In  the  absence  of  an  exjiiess  agreement  to  that  effect,  there  is  no 
right  on  the  part  of  any  of  the  members  of  an  ordinary  partner- 
ship to  expel  any  other  member.  Nor,  in  the  absence  of  express 
agreement,  can  any  of  the  members  of  an  ordinary  partnership  for- 
feit the  share  of  any  other  member,  or  compel  him  to  quit  the  firm 
on  taking  what  is  due  to  him.  As  there  is  no  method,  except  a  dis- 
solution, by  which  a  partner  can  retire  against  the  will  of  his  co- 
partners, so  there  is  no  method,  except  a  dissolution,  by  which  one 

2  6  Amsinck  t.  Bean,  22  Wall.  395. 

2«  2  Lindl.  Partn.  5S3;   Nerot  v.  Burnand,  4  Russ.  247. 

2  7  Brown  v.  Chancellor,  61  Tex.  437. 

2  8  Bassett  v.  Shepardson,  52  Mich-  3,  17  N.  W.  217.  A  married  woman  may  en- 
gage in  business  with  her  husband  as  partner.  Bumey  t.  Grocery  Co.  (Ga.)  25  S. 
B.  915. 

GEO.PART.— 28 


402  DISSOLUTION.  (Ch.  9 

partner  can  be  got  rid  of  against  his  own  will.**  With  a  view  to 
facilitate  the  removal  of  a  partner  who  misconducts  himself,  it  is 
not  unfrequentlj  agreed  that  a  power  to  expel  shaJl  be  exercisable 
in  certain  events  and  under  certain  restrictions.  These  "expulsion 
clauses,"  as  they  are  termed,  are  always  construed  strictly,  and  no 
expulsion  under  them  will  be  effectual  unless  the  expelling  partners 
have  acted  with  perfect  good  faith.*" 

SAME— CAUSES  NOT  SUBJECT    TO  STIPULATION. 

174.  The  following  causes  dissolve  a  partnership,  though 
the  partners  have  inserted  a  stipulation  to  the  con- 
trary in  their  articles: 

(a)  Events  rendering  business  unlawful  (p.  402). 

(b)  Bankruptcy  of  the  firm  (p.  403). 

EvenU  Rendering  Business  Unlawful —  War. 

Any  event  that  renders  the  further  prosecution  of  business  unlaw- 
ful, or  renders  unlawful  the  continued  association  of  the  partners 
for  that  purpose,  dissolves  the  finn.*^  As  an  instance  of  such  an 
event  the  following  is  suggested  in  Pollock's  Digest:"  "A.  is  a 
partner  with  10  other  persons  in  a  certain  business.  An  act  was 
passed  which  made  it  unlawful  for  more  than  10  persons  to  carry 
on  business.  Tlie  partnership  of  which  A.  was  a  member  was  dis 
solved."  The  breaking  out  of  war  between  two  countries  in  which 
partners  are  severally  resident  necessarily  ends  the  relation,  since 
the  partners  are  debarred  from  intercourse  with  each  other.*' 

2  8  Clarke  v.  Hart,  6  H.  L.  Cas.  633;  Crawshay  t.  Ck)llin8,  15  Ves.  218,  226; 
Featheretonhaugh  v.  Fenwick,  17  Ves.  298,  309. 

80  Patterson  v.  Silliman,  28  Pa.  St.  304;  Evans  t.  Philadelphia  Club,  50  Pa.  St. 
107;  Berry  t.  Cross,  3  Sandf.  Ch.  1;  Gorman  v.  Russell,  14  Cal.  531;  Blisset  v. 
Daniel,  10  Hare,  493;  Wood  v.  Woad,  L.  R.  9  Exch.  190;  Steuart  ▼.  Gladstone,  10 
Ch.  Div.  626;    RusseU  t.  RusseU,  14  Ch,  Div.  471,  478. 

81  2  Lindl.  Partn.  585. 

3  2  Poll.  Partn.  51. 

83  Hanger  v.  Abbott,  6  Wall.  532;  Matthews  r.  McStea,  91  U.  S.  7;  Bank  of 
New  Orleans  v.  Matthews,  49  N.  Y.  12;  Griswold  v.  Waddington,  15  Johns.  (N.  if.) 
57;    Hilly ard  v.  Mutual  Ben.  Life  Ins.  Ca,  35  N.  J.  Law,  414. 


§    174)  CAUSES    NOT   SUBJECT    TO    STIPULATION.  403 

Banh^ptcy  of  the  Firm. 

Bankruptcy  of  the  firm,  though  not  bankruptcy  of  a  partner,  ex- 
cept in  partnerships  at  will,  dissolves  the  partnership  ipso  facto.** 
"If  a  firm  of  partners,  or  even  any  one  member  of  the  firm,  is  ad- 
judged bankrupt,  the  firm  is  dissolved."  "*  Lindley  gives  two  rea- 
sons for  this  being  the  case:  First,  "because  it  is  impossible  for 
the  business  of  the  firm  to  be  carried  on";  and,  second,  'Tjecause 
there  is  a  transfer  of  each  bankrupt's  interest  to  his  trustee."  Ap- 
plying the  first  of  these  reasons  to  an  adjudication  of  bankruptcy 
as  to  the  whole  firm  it  is  suflScient  of  course  and  it  seems  too  plain 
to  need  exposition  that  such  an  adjudication  necessarily  dissolves 
the  partnership.  It  does  not  seem  so  plain  that  an  adjudication  as 
to  any  one  partner  must  render  in  all  cases  the  further  prosecution 
of  the  business  impossible.** 

Effect  of  an  Execution  against  a  Partner. 

The  execution  of  a  writ  of  fi.  fa.  against  partnership  property 
does  not,  of  itself,  dissolve  the  partnership;*^  but  dissolution  is 
the  inevitable  consequence  of  an  undivided  interest  in  partnership 
property  being  acquired  under  such  a  writ  by  a  stranger.'*  Why 
should  the  purchase  at  the  shenflfs  sale  dissolve  the  partnership, 
against  the  wishes  of  the  co-partner  of  the  partnership,  in  a  partner- 
ship other  than  the  one  at  will?  The  purchaser  does  not  thereby 
enter  the  firm,  and  his  purchase  assumes  substance  at  the  dissolution 

84  McKelvy's  Appeal,  72  Pa.  St.  409;   Wells  y.  Ellis,  G8  Gal.  243,  9  Pac.  80. 

38  2  Lindl.  Partn.  577. 

8  6  See  ante,  p.  399. 

37  Arnold  t.  Brown,  24  Pick.  (Mass.)  89;  Foster  v.  Hall,  4  Humph.  (Tenn.)  548. 
352. 

8  8  Renton  v.  Chaplain,  9  N.  J.  Eq.  62;  Nixon  v.  Nash,  12  Ohio  St.  647;  Sanders 
V.  Young,  31  Miss.  Ill;  Hershfield  v.  Clallin,  25  Kan.  166;  Carter  v.  Roland,  53 
Tex.  540;  Skipp  t.  Harwood,  2  Swanst.  586.  And  see  Pol.  Partn.  art.  48.  That 
a  transfer  to  a  co-partner  works  a  dissolution,  see  Sistare  t.  Cushing,  4  Hun 
(N.  Y.)  503;  Edeua  t.  Williams,  36  111.  2.12;  Wiggin  v.  Goodwin,  03  Me.  389; 
Rogers  v.  Nichols,  20  Tex.  719;  Horton's  Appeal,  13  Pa.  St.  66.  That  no  dissolu- 
tion is  caused  if  no  retirement  of  a  partner  is  contemplated,  see  Russell  v.  Leland, 
12  Allen  (Mass.)  349;  Buford  v.  Neely,  2  Dev.  Eq.  (N.  O.)  481.  That  such  a 
transfer  is  only  evidence  tending  to  show  a  dissolution,  see  Taft  v.  Buffum,  14  Pick, 
(ilass.)  322;    Waller  v.  Davis.  59  Iowa,  103,  12  N.  W.  798. 


404  DISSOLUTION.  (Ch.  9 

already  provided  for.     There  seems  to  be  no  reason  why  he  should 
be  able  to  accelerate  a  dissolution  already  set  for  a  future  day. 

SAME— CAUSES    FOB    WHICH    A    COURT    WILL    DECREE    A 

DISSOLUTION. 

175.  A  partnersMp  will  be  dissolved  by  a  decree  of  court 
for  the  following  causes: 

(a)  Insanity  or  other  incompetency  of  a  partner  (p.  404). 

(b)  Misconduct  of  a  partner  (p.  404). 

(c)  Impossibility  of  making  profit  (p.  406). 

Insanity  or  Other  Incompetency. 

A  court  of  equity  will  decree  the  dissolution  of  a  partnership  upon 
petition  and  proof  given  of  the  fact  of  a  partner  having  lost  his 
mind.*'  The  petitioner  need  not  be  a  co-partner,  although  he  is 
so  usually,  but  may  be  the  lunatic  himself,  by  his  committee,  or  by 
his  next  friend  in  default  of  his  having  a  committee.*^  In  the  lat- 
ter case  the  court  may,  before  acting  upon  the  petition,  direct  that 
proceedings  be  had  before  the  proper  tribunal  to  have  the  state  of 
the  partner's  mind  determined."  Any  other  permanent  incapacity 
of  a  partner  to  act  up  to  his  part  of  the  agreement  of  partnership 
is  a  cause  for  dissolution;  for  instance,  the  placing  of  the  partner 
under  guardianship.** 

MiscondMct  of  a  Partner. 

The  court  will  dissolve  a  partnership  on  the  ground  that  a  part- 
ner so  seriously  misconducts  himself  as  to  render  it  impossible  for 

40  Raymond  t.  Vaughan,  17  111.  App.  144;  Rowlands  t.  Evans,  30  Beav.  302. 
War:  Matthews  v.  McStea,  91  U.  S.  7;  Buchanan  v.  Curry,  19  Johns.  (N.  Y.)  137. 
Bankruptcy:  Talcott  v.  Dudley,  5  IlL  427;  Marquand  v.  Manufacturing  Co.,  17 
Johns.  (N.  Y.)  525;  Moody  v.  Rathbum,  7  Minn.  89  (Gil.  58).  Completion  of  en- 
terprise: Bohrer  v.  Drake,  33  Minn.  408,  23  N.  W.  840;  Sims  v.  Smith,  11  Rich. 
(S.  C.)  565.  Sale  of  interest:  Carter  v.  Roland,  53  Tex.  540;  Aspinall  v.  Railway 
Co.,  11  Hare,  325. 

41  Jones  V.  Lloyd,  L.  R.  18  Eq.  265;    Anon.,  2  Kay  &  J.  441;    Sayer  y.  Bennet, 

1  Cox,  107. 
4  2  Sayer  t.  Bennet,  1  Cox,  107;   Leaf  v.  Coles,  1  De  Gex,  M.  &  G.  174;   2  Lindl. 

Partn.  579. 
48  Mechem,  Partn.  %  249. 


§    175)  CAUSES    FOR    A    DECREE    OF    DISSOLUTION.  405 

his  co-partners  to  continue  to  act  with  him.**  But  it  is  not  consid- 
ered to  be  the  duty  of  the  court  to  enter  into  partnership  squabbles, 
and  it  will  not  dissolve  a  partnership  on  the  ground  of  the  ill  tem- 
per or  misconduct  of  one  or  more  of  the  partners,  unless  the  others 
are  in  effect  excluded  from  the  concern,*"  or  unless  the  misconduct 
is  of  such  a  nature  as  utterly  to  destroy  the  mutual  confidence 
which  must  subsist  between  partners  if  they  are  to  continue  to  carry 
on  their  business  together.**  Where  a  dissolution  is  sought  on  this 
latter  ground,  it  would  seem  that  the  misconduct  must  be  such  as 
to  affect  the  business,  not  merely  by  shaking  its  credit  in  the  eyes 
of  the  world,  but  by  rendering  it  impossible  for  the  partners  to  con- 
duct their  business  together  according  to  the  agreement  into  which 
they  have  entered.*^  When  the  court  dissolves  a  partnership  on 
the  ground  of  misconduct,  the  dissolution  dates  from  the  judgment, 
unless  there  are  special  grounds  for  ordering  a  dissolution  as  from 
some  other  date.** 

Same — Degree  of  Misconduct, 

It  may,  however,  be  usefully  observed  here  that  keeping  erroneous 
accounts,  and  not  entering  receipts,**  refusal  to  meet  on  matters 
of  business,**"  continued  quarreling,  and  such  a  state  of  animosity 
as  precludes  all  reasonable  hope  of  reconciliation  and  friendly  co- 
operation,"^^ have  been  held  suflQcient  to  justify  a  dissolution.     It 

**  Rosenstoin  v.  Buras,  41  Fed.  841;  Page  t.  Vankirk,  1  Brewst.  (Pa.)  282; 
Kennedy  v.  Kennedy,  3  Dana  (Ky.)  239;  Groth  v.  Payment,  79  Mich.  290,  44  N 
W.  611;  Siegrhortner  t.  Weissenborn,  20  N.  J.  Eq.  172;  Waters  v.  Taylor,  2  Ves 
&  B.  299;  Smith  v.  Jeyes,  4  Bear.  502.  A  conveyance  by  one  partner  of  part 
nership  realty  in  payment  of  an  individual  debt  is  such  a  fraud  on  the  firm,  its  as 
sets  only  slightly  exceeding  its  liabilities,  as  warrants  a  dissolution  of  the  partner 
ship.      Hubbard  v.  Moore,  67  Vt.  532,  32  Atl.  465. 

4  5  Roberts  v.  Eberhardt,  Kay,  148;  Wray  v.  Hutchinson,  2  Mylne  «&  K.  235; 
Marshall  v.  Colman,  2  Jac.  &  W.  266;   Goodman  v.  Whitcomb,  1  Jac.  &  W.  589 

4«  Harrison  v.  Tennant,  21  Beav.  482;    Smith  v.  Jeyes,  4  Beav.  503. 

*7  Anon.,  2  Kay    &  J.  441. 

*8  Lyon  V.  Tweddell,  17  Ch.  Div,  529. 

*e  Go  wan  v.  Jeffries,  2  Ashm.  (Pa.)  296;  Cattle  v.  Leitch,  35  Cal.  434;  Chees- 
man  v.  Price,  35  Beav.  142;    Goodman  v.  Whitcomb,  1  Jac,  &  W.  589,  593. 

60  Gow,  Partn.  p.  227;  De  Berenger  v.  Hamel,  7  Jarm.  &  B.  Conv.  (25th 
Ed.)  26. 

Bi  Sutro  T,  Wagner,  23  N.  J.  Eq.  388;  Abbot  v.  Johnson,  32  N.  H.  9;    Watn«y 


406  DISSOLUTION.  (Ch.  9 

is  not  necessaiy,  iii  ordei*  to  induce  the  court  to  interfere,  to  show 
personal  rudeness  on  the  part  of  one  partner  to  the  other,  or  even 
any  gross  misconduct  as  a  partner. ^^  All  that  is  necessary  is  to 
satisfy  the  court  that  it  is  impossible  for  the  partners  to  place  that 
confidence  in  each  other  which  each  has  a  right  to  expect,  and  that 
such  impossibility  has  not  been  caused  by  the  person  seeking  to  take 
advantage  of  it."^^  In  Essell  v.  Hayward  "  it  was  held  that,  where 
one  partner  had  become  liable  to  a  criminal  prosecution  by  reason 
of  his  having  been  guilty  of  a  fraudulent  breach  of  trust,  his  co- 
partner had  a  right  to  have  the  partnership  dissolved;  and,  a  no- 
tice to  dissolve  having  been  given  by  him,  the  partnership  was  or- 
dered to  stand  dissolved  as  from  the  date  of  the  notice,  although 
the  partnership  was  not  at  w^ill. 

Same — Misconduct  on  Part  of  Partner  Seeking  Dissolution. 

It  must  be  borne  in  mind  that  the  court  will  never  permit  a  part- 
ner, by  misconducting  himself,  and  rendering  it  impossible  for  his 
partners  to  act  in  harmony  with  him,  to  obtain  a  dissolution  on  the 
ground  of  the  impossibility  so  created  by  himself.""  In  order  to 
facilitate  a  dissolution  in  the  event  of  misconduct,  a  special  clause 
is  usually  inserted  in  partnership  articles. 

ImpossiVility  of  Making  Profit. 

Where,  during  the  continuance  of  a  co-partnership,  it  becomes 
impracticable  to  carry  on  its  business  without  great  loss,  a  court 
of  equity  will  decree  a  dissolution,  in  a  suit  brought  for  that  purpose 
by  one  of  the  partners."*^  Dissensions  among  the  partners,  ren- 
dering the  successful  prosecution  of  the  business  impossible,  have 
in  a  number  of  cases  been  considered  sufficient  cause  for  decreeing 
a  dissolution."^ 

V.  Wells,  30  Beav.  56;    Pease  v.  Hewitt,  31  Beav.  22;    Leary  v.  Shout,  u3  iieav. 
582;    Baxter  v.  West,  1  Drew  &  S.  173. 
6  2  2  Lindl.  Partn.  581. 

63  Harrison  v.  Tennant,  21  Beav.  482. 

64  30  Beav.  158. 

66  Gerard  v.  Gateau,  84  111.  121;    Fairthorne  t.  Weston,  3  Hare,  387. 

66  Holladay  t.  Elliott,  8  Or.  84;    Rosenstein  v.  Burns,  41  Fed.  841. 

67  Singer  v.  Heller,  40  Wis.  544;  Blake  v.  Dorgan,  1  G.  Greene  (Iowa)  537; 
Watney  t.  Wells,  30  Beav.  5tt. 


§    176)  CONSEQUENCES    OF    DISSOLUTION.  407 

CONSEQUENCES  OF  DISSOLUTION— AS  TO   THIRD  PERSONS. 

176.  Upon  the  dissolution  of  a  partnership,  third  persons 
have  a  right  to 

(a)  Notice  of  the  dissolution  (p.  407). 

(b)  Payment  of  claims  due  from  the  firm  (p.  408). 

Notice  of  Dissolution. 

It  is  due  to  the  public  that,  where  a  partnership  has  been  noto 
riously  doing  its  regular  business,  it  be  given  notice  of  the  dissolu 
tion.  A  corresponding  duty,  of  course,  rests  upon  the  partners  to 
give  this  notice;  and,  by  the  failure  of  this  duty,  the  partner  in- 
volved is  looked  to,  to  compensate  an  aggrieved  third  person.  It 
is  said  by  Collyer:"  "The  principle  upon  which  this  responsibility 
proceeds  is  the  negligence  of  the  partners  in  leaving  the  world  in 
ignorance  of  the  fact  of  the  dissolution,  and  leaving  strangers  to 
conclude  that  the  partnership  continues,  and  to  bestow  faith  and 
confidence  on  the  partnership  named  in  consequence  of  that  belief; 
and,  when  one  of  two  innocent  persons  must  suffer  from  giving  the 
credit,  he  who  has  misled  the  confidence  of  the  other,  and  has  been 
the  cause  of  credit  either  by  his  misrepresentation  or  his  negligent' 
or  his  fraud,  ought  to  suffer,  instead  of  the  other."  Thus,  an  osten- 
sible partner,  who,  upon  retiring  from  the  firm,  fails  to  give  notice 
of  his  retirement,  is  liable  to  a  third  party  for  any  loss  the  latter 
may  have  suffered  by  dealing  with  the  continuing  firm,  under  the 
impression  that  there  had  no  such  retirement  taken  place.  The 
partner  had  it  in  his  power  to  give  some  sort  of  notice  to  the  third 
person,  and,  without  being  notified,  the  third  person  has  a  right 
to  assume  no  change  has  taken  place,  for  it  would  be  too  much  to 
require  of  one  habitually  dealing  with  a  firm  that  he  must,  before 
each  new  transaction  they  have  together,  make  inquiry  as  to  wheth- 
er, since  the  last  previous  one,  there  has  been  any  change  in  the 
firm  membership.  If  he  knew  before  the  transaction  that  there 
was  such  a  partnership,  did  not  know  of  its  having  been  dissolved, 
and  dealt  with  it  under  the  impression  that  he  was  dealing  with  the 
old  firm,  then,  in  the  absence  of  some  legal  form  of  notice,  he  has 

••  Partn.   (3d   Ed.)  505. 


408  DISSOLUTION.  (Ch.  9 

his  right  to  be  reimbursed  for  the  loss  to  which  his  mistake  sub- 
jected him."®  The  persons  who  are  entitled  to  notice,  and  the  na- 
ture of  the  notice  required,  in  different  cases,  have  been  considered 
in  treating  of  the  termination  of  a  partner's  liability.'* 

Payment  of  Clairm. 

A  dissolution  of  partnership  must  be  followed  by  an  ascertainment 
of  what  the  firm  owes  to  outside  parties,  and  payment  accordingly 
as  soon  as  assets  can  be  put  into  proper  shape,  and  applied  to  that 
purpose.®^  And  in  this  connection  it  must  be  borne  in  mind  that 
a  dissolution  under  no  circumstances  discharges  any  partner  of  lia- 
bility for  firm  debts  of  a  period  ending  with  the  dissolution,  unless 
the  creditor  has  in  some  manner  released  him;  for  instance,  by  ad- 
mitting the  debt  to  be  settled,  or  accepting  an  obligation  in  place 
of  the  one  binding  him.  If  the  firm  is  dissolved  by  the  retirement 
of  a  i)artner,  and  the  continuing  partners  assume  all  the  debts,  and 
are  accepted  as  the  debtors  by  the  creditor,  this,  of  course,  dischar- 
ges the  retiring  partner;  and  so  similarly,  in  case  of  the  death  of  a 
partner,  would  such  an  acceptance  by  the  creditors  release  the  es- 
tate of  the  partner  dying.«» 

SAME— AS  TO  THE  PARTNERS. 

177.  The   consequences    of   a    dissolution    as   regards   the 

partners  themselves  ■will  be  considered  under  the 
following  heads: 

(a)  Winding  up  business  (p.  408). 

(b)  Notice  of  dissolution  (p.  411). 

(c)  Sale  of  good  will  (p.  412). 

(d)  Payment  of  firm  debts  (p.  413). 

(e)  Earnings  after  dissolution  (p.  414). 

(f )  Disposition  of  surplus  property  (p.  415). 

178.  WINDING  TIP  BUSINESS— Upon  dissolution  the  part- 

ners have  pow^er  to  do  all  acts  necessary  to  wind 
up  the  business.  A  surviving  partner  has  the  sole 
right  to  wind  up. 

B8  Lovejoy  v.  Spafford,  93  U.  S.  430.  «i  See  ante,  p.  273. 

•0  Ante,  p.  261.  '2  See  ante,  p.  265. 


§    178)  WINDING    UP    BUSINESS.  409 

The  powers  and  authority  of  the  partners  after  the  dissolution 
continue  as  before  as  to  the  sole  business  then  before  them, — that 
is,  the  winding  up  of  the  firm  affairs;  and,  in  connection  with  this, 
they  can  bind  each  other  by  their  acts."  Such  winding  up  con- 
templates, of  course,  the  completion  of  transactions  begun  before 
the  dissolution;  and  here  they  can  bind  each  other  by  their  act, 
as  before.'*      But  they  cannot  undertake  any  new  business,  so  as  to 

6  3  Robbins  v.  Fuller,  24  N,  Y.  570;  Belanger  v.  Dana,  52  Hun,  39,  4  N.  Y. 
Supp.  776;  Hilton  v.  Vanderbilt,  82  N.  Y.  591;  Riddle  v.  Etting,  32  Pa.  St.  412; 
Major  T.  Hawkes,  12  111.  298;  Heartt  v.  Walsh,  75  111.  200;  Bender  v.  Markle,  37 
Mo.  App.  234;  Ru£fner  v.  Hewitt,  7  W.  Va.  585;  Knowlton  v.  Rud,  38  Me.  246; 
Hall  V.  Clagett,  48  Md.  223;  Torrey  v.  Baxter,  13  Vt.  452;  Peacock  v.  Peacock, 
16  Ves.  49,  57.  After  dissolution,  the  agency  of  a  partner  exists  merely  for  wind- 
ing up  the  firm  business,  collecting  credits,  and  paying  off  debts.  Thursby  v. 
Lidgerwood,  69  N.  Y.  198;  Lange  t.  Kennedy,  20  Wis.  279;  Bryant  v.  Lord,  19 
Minn.  396  (Gil.  342);  Hayden  t.  Cretcher,  75  Ind.  108;  Hawn  v.  Water  Co..  74 
Cal.  418,  16  Pac.  196. 

64  Palmer  v.  Sawyer,  114  Mass.  1;  Page  v.  Wolcott,  15  Gray  (Mass.)  536;  Jones 
V.  Foster,  67  Wis.  296,  30  N.  W.  697;  Briggs  v.  Briggs,  15  N.  Y.  471;  Hubbard 
V.  Matthews,  54  N.  Y.  43.  The  dissolution  of  a  firm  operates  as  a  termination  of  a 
power  previously  given  to  such  firm.  Bank  of  Mobile  v.  Andrews,  2  Sneed  (Tenn.) 
535.  And  see  Morss  v.  Gleason,  64  N.  Y.  204;  Clark  v.  Wilson,  19  Pa.  St.  414; 
Waller  v.  Davis,  59  Iowa,  103,  12  N.  W.  798;  Mudd  v.  Bast,  34  Mo.  465;  White  v. 
White,  5  Gill  (Md.)  359.  In  the  absence  of  fraud,  a  solvent  partner  could,  on  the 
dissolution  of  the  partnership  by  the  assignment  of  his  insolvent  co-partners,  mort- 
gage the  entire  property  of  the  partnership  to  a  creditor  of  the  firm,  without  render- 
ing himself  liable  to  the  other  partners  for  the  difference  between  the  actual  value 
of  the  firm  property  and  the  amount  for  which  it  was  sold  under  the  mortgage. 
Thompson  v.  Noble  (Mich.)  65  N.  W.  563.  A  firm  of  which  testator  was  a  member 
having  been  dissolved  by  his  death,  and  the  provisions  of  his  will  for  its  further  con- 
tinuance being  void,  it  became  the  duty  of  the  surviving  partners  to  close  up  the 
partnership  affairs,  and  on  their  failure  to  do  so  the  duty  devolved  on  the  executor. 
Hamlin  v.  Mansfield,  88  Me.  131,  33  Atl.  788.  A  surviving  partner  cannot  sue  at 
law  on  a  note  discounted  by  the  firm,  but  executed  by  the  deceased  partner  to  de- 
fendant, who  indorsed  it  for  the  accommodation  of  the  maker.  Patton  v.  Carr,  117 
N.  C.  176,  23  S.  E.  182.  A  surviving  partner  may  enforce  a  judgment  recovered 
by  the  firm  in  an  action  before  the  death  of  one  of  the  partners.  Judy  v.  Storage 
Co.,  60  Mo.  App.  114.  A  mortgage  may  be  enforced  by  the  survivors  of  a  firm  to 
which  it  was  given.  Younts  v.  Starnes,  42  S.  C.  22,  19  S.  E.  1011.  The  legal  title 
of  a  deceased  partner  to  partnership  realty  descends  to  his  heir,  and  the  interest  of 
the  surviving  partners  is  merely  equitable.  Hannegan  v.  Roth,  12  Wash.  65,  40 
Pac  636w     See,  also,  Bollenbacher  t.  Bank,  8  Ind.  App.  12,  35  N.  E.  403. 


4:10  DISSOLUTION.  (Ch.  9 

make  their  co-partners  liable.'"^  However,  a  bankrupt  partner  has 
no  powers  at  all  in  settling  the  firm's  affairs  after  dissolution,  any 
more  than  has  the  retiring  partner  or  the  representatives  of  the  de- 
ceased one.*' 

Survwing  Partner. 

The  surviving  partner  has  the  sole  power  of  settling  the  partner- 
ship affairs,'^  so  that  the  representatives  of  a  deceased  partner  or 
the  assignee  of  a  bankrupt  cannot  interfere  wdth  his  selling  the  firm 
property,  and  applying  it,  or  otherwise  in  attaining  the  settlement, 
unless  a  case  can  be  shown  of  plain  delinquency  on  his  part,  in  which 
case  a  court  of  equity  may  be  invoked  by  them  to  compel  him  to  act 
as  he  should  act  for  the  good  of  all  interested  parties.'*      The  sur- 

8  6  Bell  V.  Morrison,  1  Pet.  351;  Bennett  v.  Buchan,  (jl  N.  Y.  222;  Payne  v. 
Smith,  28  Hun  (N.  Y.)  104,  lOG;  Sutton  v.  Dillaye,  3  Barb.  (N.  Y.)  529;  Easter  v. 
Bank,  57  111.  215;  Helm  v.  Cantrell,  59  111.  524;  Hicks  v.  Russell.  72  111.  230; 
Bowman  v.  Blodgett,  2  Mete.  (Mass.)  308;  Whitehead  V.  Bank,  2  Watts  &  S.  (Pa.) 
172;  Dunlap  v.  Limes,  49  Iowa,  177;  Mauney  v.  Coit,  80  N.  C.  300.  General 
authority  to  a  partner,  after  dissolution,  to  close  up  the  partnership  indebtedness 
by  executing  notes  in  the  firm  name,  does  not  authorize  him  to  bind  his  late 
co-partner  by  stipulating  in  such  notes  to  pay  attorney's  fees  and  to  waive  exemp- 
tions.     Brown  v.  Bamberger  (Ala.)  20  South.  114. 

68  Amsinck  v.  Bean,  22  Wall.  395;  Ogden  v.  Arnot,  29  Hun  (N.  Y.)  146,  149; 
Talcott  V.  Dudley,  5  111.  427;  Hanson  v.  Paige,  3  Gray  (Mass.)  239;  Sehalck  v. 
Harmon,  6  Minn.  205,  270  (Gil.  176). 

«T  Wallace  v.  Fitzsimmons,  1  Dall.  248;  Bohler  v.  Tappan,  1  Fed.  469;  Miller 
V.  .Tones,  39  111.  54;  People  v.  White,  11  111.  341;  Merritt  v.  Dickey,  38  Mich.  41; 
Barry  v.  Briggs,  22  Mich.  201;  Carrere  v.  Spofford,  46  How.  Prac.  (N.  Y.)  294; 
McKay  v.  Joy,  70  Gal.  581,  11  Pac.  832.  A  surviving  partner  has  no  right  to 
continue  the  partnership  business  longer  than  is  necessary  for  winding  up.  Clay 
V.  Field,  34  Fed.  375;  Nelson  v.  Hayner,  66  111.  487;  Clay  v.  Freeman,  118  U.  S. 
97,  6  Sup.  Ct.  964;  Grim's  Appeal,  105  Pa.  St.  375;  Case  v.  Abeel,  1  Paige  (N. 
Y.)  393;  Brown  v.  Watson,  66  Mich.  223,  33  N.  W.  493;  Gable  v.  Williams,  59 
Md.  46. 

6  8  McCartey  v.  Nixon,  2  Dall.  65,  note;  Connor  v.  Allen,  Har.  (Mich.)  371; 
Nelson  v.  Hayner,  66  111.  487;  People  v.  White,  11  111.  341,  350;  Jacquin  v.  Buis- 
son,  U  How.  Prac.  (N.  Y.)  385;  Shields  v.  Fuller,  4  Wis.  102,  105.  Assets  of 
a  partnership  in  the  hands  of  the  surviving  partner  at  his  death  are  so  far  his 
"personal  estate,"  within  the  meaning  ol  Mass.  Pub.  St.  1882,  c.  135,  §  2,  that 
the  probate  court  may  make  an  allowance  therefrom  to  his  widow,  although  the 
assets  are  insufficient  to  pay  the  partnership  creditors  ua  full.  Bush  v.  Clark, 
127  Mass.  111. 


§    179)  NOTICE    OF    DISSOLUTION.  411 

viving,  or,  to  speak  more  generally,  the  liquidating,  partner,  is  not 
entitled,  unless  by  prearrangement,  to  compensation  for  Ms  serv- 
ices.®^ 

179.  NOTICE  OF  DISSOLUTION— A  partner  has  a  right 
to  give  notice  of  dissolution,  and  to  have  a  co-part- 
ner, if  necessary,  co-operate  in  giving  the  notice. 

Upon  the  happening  of  any  event  which,  under  the  law  or  under 
the  agreement  of  the  partners,  must  precipitate  the  end  of  the  rela- 
tion, it  lies  with  any  one  of  the  partners  to  give  whatever  notice 
of  the  dissolution  may  be  requisite,  "so  that  a  stop  may  be  put  to 
the  power  of  his  co-partners  to  bind  him."  ""*  And  if  he,  in  any 
case,  cannot  alone  give  a  valid  notice,  he  has  the  right  to  require 
that  his  co-partners  act  with  him.  Thus,  in  Troughton  v.  Hunter,''^ 
when  one  partner  persisted  in  his  refusal  to  sign  such  a  notice,  and 
the  practice  of  the  London  Gazette  office  was  to  publish  such  notice 
only  when  signed  by  all  the  partners,  it  was  decreed  that  the  obsti- 
nate partner  should  do  anything  necessary  towards  having  the  no- 
tice published  in  the  Gazette. 

6  9  Denver  v.  Roane,  99  U.  S.  355;  Schenkl  t.  Dana,  118  Mass.  236;  Washburn  v. 
Goodman,  17  Pick.  (Mass.)  519;  Loomis  v.  Armstrong,  49  Mich.  521,  14  N.  W. 
r)05;  Gyger's  Appeal,  62  Pa.  St.  73;  Brown  v.  McFarland's  Ex'r,  41  Pa.  St.  129, 
133;  Com.  V.  Bracken  (Ky.)  32  S.  W.  609;  Kimball  v.  Lincoln,  5  111.  App.  316; 
A  partner  rendering  services  in  excess  of  the  mere  winding  up  of  the  business  of 
the  partnership  on  dissolution  by  the  death  of  his  co-partner  is  entitled  to  com- 
pensation therefor.  Richards  v.  Maynard,  61  111.  App.  336.  Where  the  surviv- 
ing partner,  with  the  concurrence  of  the  executors  of  the  deceased  partner,  carries 
on  the  business  with  a  view  to  its  sale  as  a  going  concern,  but  without  any  contract 
witii  them  for  remuneration,  he  is  not,  in  the  absence  of  a  provision  to  that  effect 
in  the  partnership  articles,  entitled  to  any  allowance  for  his  trouble,  unless  profits 
have  been  made.  Aldridge  v.  Aldridge,  8  Reports,  189;  Id.  [1894]  2  Ch.  97. 
And  see  Jacksonville,  M.  P.  Ry.  &  Nav.  Co,  v.  Warriner,  35  P"'la.  197,  16  South. 
898;    ante,  p.  165. 

70  Lindl.  Partn.  588.  And  see  Troughton  v.  Hunter,  18  Beav.  470;  Hendry  ▼. 
Turner.  32  Ch.  Div.  355. 

Ti  18  Beav.  470. 


412  DISSOLUTION.  (Ch,   9 

180.  SALE  OF  GOOD  WILI.— The  good  will  of  the  busi- 
ness is  partnership  property,  and  on  dissolution 
the  partners  have  a  right  to  have  it  sold,  and  its 
value  protected  until  sale. 

"The  good  will  of  a  partnership,  in  so  far  as  it  has  pecuniary 
value,  is  partnership  property,  unless  the  contrary  can  be  shown."  ^^ 
Being  thus  assets,  there  is  a  right  in  each  of  the  partners  to  have 
it  reduced  to  such  a  form  as  to  be  applicable  to  the  ends  of  the  set- 
tlement of  the  firm  affairs;  that  is,  the  payment  of  debts,  and  the 
distribution  among  the  partners  of  the  surplus  left  after  such  pay- 
ment.'^'  "That  which  the  purchaser  of  the  good  will  actually  ac- 
quired as  between  himself  and  his  vendor  is,"  says  Pollock,  "the 
right  to  carry  on  the  same  business  under  the  old  name,  *  •  • 
and  to  represent  himself  as  the  successors  to  that  business."  '* 

Protectvng  Value  of  Good  Will  until  Sale. 

After  the  settlement  of  the  partnership  business  and  the  winding 
up  of  its  affairs,  any  one  of  the  partners  is  at  liberty  to  use  the  firm 

T2  Lindl.  Partn.  327.  See  Dayton  t.  Wilkes,  17  How.  Prao.  (N.  Y.)  510;  Hol- 
den's  Adm'r  v.  M'Makin,  1  Pare.  Eq.  Cas.  (Pa.)  270;  Bradbury  v.  Dickens,  27 
Beav,  53;  Pawsey  v.  Armstrong:,  18  Ch.  Div.  698.  But  see  MeCall  v.  Moschowitz, 
10  N.  Y.  Civ.  Proc.  107.  Where,  on  the  dissolution  of  a  partnership,  the  ex- 
clusive use  of  the  firm  name  is  vested  in  one  partner,  the  other  may  be  enjoined 
from  representing  himself  as  its  successor.  Holbrook  v.  Nesbitt,  163  Mass.  120, 
39  N.  E.  794.  Cf.  U.  S.  Cordage  Co.  v.  William,  Wall's  Sons  Rope  Co.,  90  Hun, 
429,  35  N.  Y.  Supp.  978.  But  see  Mason  v.  Dawson,  15  Misc.  Rep.  595,  37  N.  Y. 
Supp.  90. 

78  Holden's  Adm'r  v.  M'Makin,  1  Pars.  Eq.  Cas.  (Pa.)  270;  Dougherty  t.  Van 
Nostrand,  Hoff.  Ch.  (N.  Y.)  68;  Dayton  v.  Wilkes,  17  How.  Prac.  (N.  Y.)  510; 
Snyder  Mauufg  Co.  v.  Snyder  (Ohio  Supp.)  43  N.  B.  325;  Sheppard  v.  Boggs, 
9  Neb.  257,  2  N.  W.  370;  Bradbury  v.  Dickens,  27  Beav.  53;  Mellersh  v.  Keen, 
28  Beav.  453;  Austen  v.  Boys,  2  De  Gex  &  J.  626.  Secret  processes  of  manu- 
facture, trade-names  which  have  been  applied  to  the  manufactured  products,  and 
trade-marks  owned  by  the  firm,  are  not  subject  of  sale  on  dissolution  of  the  firm, 
and  thereafter  each  party  may,  in  the  absence  of  an  agreement  to  the  contrary, 
manufacture  by  such  processes,  and  use  such  names  and  marks.  (5  Misc.  Rep. 
386,  25  N.  Y.  Supp.  857,  affirmed.)  Baldwin  T.  Von  Micheroux,  83  Hun,  43,  31 
N.  Y.  Supp.  696. 

»*  PoL  Partn.  art.  57. 


§    181)  PAYMENT    OF    FIRM    DEBTS.  413 

name  in  case  there  is  no  agreement  to  prevent  his  doing  so/"  subject, 
of  course,  to  the  right  of  any  person  whose  name  may  appear  plainly 
in  the  firm  appellation  to  take  such  measures  as  shall  preclude  his 
being  committed  by  the  acts  of  the  person  so  using  the  partnership 
name.^'  But  this  privilege  of  the  partner  accrues  only  after,  and 
not  before,  such  settlement  on  winding  up;  and  the  partner  has  the 
right  to  restrain  his  co-partner  from  using  the  name  prematurely.''^ 
"This  is  maintained  by  Lord  Justice  Lindley,  notwithstanding  a  cer- 
tain amount  of  apparent  authority  to  the  contrary,  as  a.  necessary 
consequence  of  the  principles  stated  in  the  last  article.'*  If  any 
partner  who  may  require  it  has  the  right  to  have  the  good  will  sold 
for  the  common  benefit,  it  cannot  be  that  each  partner  is  also  enti- 
tled to  do  that  which  would  deprive  the  good  will  of  all  salable 
value.  There  is  express  authority  to  show  that,  while  a  liquidation 
of  partnership  affairs  is  pending,  one  partner  must  not  use  the  name 
or  property  of  the  partnership  to  carry  on  business  on  his  own  ac- 
count, since  it  is  the  duty  of  every  partner  to  do  nothing  to  preju- 
dice the  salable  value  of  the  partnership  property  until  the  sale."  '' 

181.  PAYMENT  OF  FIRM  DEBTS— Upon  dissolution  the 
]  artners  have  a  right  to  have  the  firm  property 
applied  to  the  payment  of  firm  debts. 

It  is  unnecessary  to  say  that  the  creditor  of  a  partnership  is  in- 
terested, not  so  much  in  the  sum  from  which  payment  comes  to  him, 
as  in  the  fact  of  his  being  paid  at  all.  Indeed,  when  he  is  paid, 
his  interest  in  the  matter  ceases  altogether,  he  not  being  concerned 
as  to  whether  the  firm  as  a  whole,  or  as  an  individual  partner,  pro- 
vided the  money  for  the  purpose.  It  is  of  very  great  importance 
to  a  partner,  however,  as  to  how  the  partnership  debts  are  to  be 
paid,  and  the  right  is  his  to  require  that  they  be  paid  by  the  firm, 
so  that  no  peril  may  come  to  his  separate  property;  that  is,  if  they 
can  be  so  paid,  for,  if  they  cannot,  then  recourse  is  to  be  had  to  sepa- 

T6  Staatts  V.  Hewlett,  4  Denio  (N.  Y.)  559;    Levj  t.  Walker,  10  Ch.  Diy.  436, 
445. 
7  8  See  ante,  p.  80. 

»T  Dayton  v.  Wilkes,  17  How.  Prac.  (N.  Y.)  510;    Turner  t.  Major,  3  Gift.  442. 
»•  Article  57.  t»  Pol.  Partn.  art.  58. 


414  DISSOLUTION.  (Cli.   y^ 

rate  property,  whether  partners  desire  it  or  not.  If  the  partner- 
ship as  a  partnership  is  solvent,  there  is,  of  course,  no  reason  why 
all  its  debts  should  not  be  paid  out  of  the  common  property.  This 
right  of  a  partner  is  called  a  "partner's  equity/'  because  it  does  not 
exist  at  law,^°  but  may  be  insisted  on,  as  against  a  creditor  at  least, 
only  when  the  estate  is  being  administered  under  direction  of  a 
court  having  equity  powers.  A  partner's  lien  has,  however,  already 
been  discussed,"  as  has  also  the  distribution  of  firm  and  separate 
property  among  the  creditors  of  the  partnership  and  of  the  individual 
partners." 

182.  EARNINGS  AFTER  DISSOLUTION— When  the  cap- 
ital of  a  retiring  or  deceased  partner  is  not  with- 
drawn, the  continuing  partners  must  pay,  for  the 
use  of  such  capital,  its  estimated  earnings. 

In  cases  where  one  partner  has  retired  or  died,  and  there  has  been 
uo  formal  settlement  had  in  consequence,  nor  any  withdrawal  of  his 
proportion  of  capital,  the  remaining  partners  continuing  the  busi- 
ness, such  retiring  partner,  or  the  representative  of  the  partner  so 
dying,  will  be  allowed  by  the  court  so  much  of  the  profits  made 
since  the  dissolution  as  seems  to  be  attributable  to  the  capital  so 
failed  to  be  withdrawn,  except,  of  course,  when  it  has  been  otherwise 
paid."  "How  far  the  profits  made  since  the  dissolution  are  attrib- 
utable to  the  outgoing  partner's  capital  is  a  question  to  be  deter- 
mined with  regard  to  the  nature  of  the  business,  the  amount  of  capi- 
tal from  time  to  time  employed  in  it,  and  the  conduct  of  the  parties 
generally.  There  is  no  fixed  rule  that  the  profits  are  divisible  in 
the  same  manner  as  if  the  partnership  had  not  ceased."  " 

When,  in  the  articles,  it  is  provided  that  any  partner  shall  nave 

80  Meech  v.  Allen,  17  N.  Y.  301. 
8x  Ante,  p.  179. 

82  Ante,  p.  273. 

83  Brown  v.  De  Tastet,  Jac.  284;  Smith  t.  Everett,  27  Beav.  446:  Featherston- 
haugh  V.  Turner.  25  Beav.  382;  Booth  t.  Parks,  1  Moll.  465;  Yates  v.  Finn,  13 
Ch.  Div.  839. 

8  4  Pol.  Partn.  (>0. 


§    183)  DISPOSITION    OF   SURPLUS   PROPERTY.  415 

the  right  to  purchase  the  interest  of  a  co-partner  who  might  die 
or  retire,  a  partner  who  avails  himself  of  this  right,  upon  the  hap- 
pening of  the  emergency,  must  account,  under  this  rule,  to  the  re- 
tiring partner,  or  to  the  representatives  of  the  deceased  partner,  if 
he  fails  to  observe  strictly  the  intention  of  the  provision."  Again, 
one  who  has  accepted  the  office  of  executor  of  his  deceased  partner, 
and  continues  the  business,  retaining  in  it  his  decedent's  interest, 
must  account,  under  this  rule,  to  the  persons  entitled  eventually 
to  the  estate,*"  "\^^len,  in  such  a  case  as  the  last,  the  surviving 
partner  associated  others  with  him,  in  continuing  the  business,  as 
co-partners,  all  were  held  liable  jointly  to  the  residuary  legatee,  the 
new  partners  not  as  partners,  but  as  having  knowingly  lent  them- 
selves to  the  breach  of  trust" 

183.  DISPOSITION  OF  SUHPLUS  PROPERTY  —  After 
payment  of  the  flrm  debts  and  advances,  the  sur- 
plus property  remaining  is  distributed  among  the 
partners  in  proportion  to  their  shares  in  the   firm. 

Upon  the  dissolution  of  a  partnership,  if  the  firm  is  solvent,  the 
surplus  property  remaining  after  the  payment  of  the  partnership 
debts  belongs  to  the  partners.  Before  this  property  can  be  distrib 
uted  among  the  partners,  any  advances  made  by  a  partner  to  the 
firm  must  be  repaid.**      Such  advances  are  in  reality  firm  debts. 

8  5  Heath  v.  Waters,  40  Mich.  457;  Holmes'  Appeal,  79  Pa.  St  279;  Vyse  v. 
Foster,  L.  R.  7  H.  L.  318.  Cf.  Ogden  v.  Astor,  4  Sandf.  (N.  Y.)  311;  Kimball 
V.  Lincoln,  99  111.  578;    Valentine  v.  Wysor,  123  Ind.  47,  23  N.  B.  1076. 

8  8  Cook  V.  Collingridge,  Jac.  007;  Townend  v.  Towneud,  1  GifE.  201;  Macdonald 
V.  Richardson,  Id.  81;  Flockton  v.  Buuning,  8  Ch.  App.  323,  note.  See  Hunter  v. 
Bowling  [189.5]  2  Ch.  223. 

8  7  Flockton  V.  Bunniug,  8  Ch.  App.  323,  note.  And  see  Vyse  v.  Foster,  L.  R. 
7  H.  L.  318;    Stroud  t.  Gwyer,  28  Beav.  130. 

.  8  8  See  2  Bates,  Partn.  §  811,  for  the  order  of  distribution.  Where  the  amount 
of  advances  made  by  a  partner  to  the  firm  is  paid  by  him  out  of  firm  funds,  the 
debt  is  satisfied;  the  contention  that,  because  he  was  entitled  to  one-half  of  the 
firm  funds,  he  only  received  from  the  firm  one-half  of  the  debt,  being  untenable. 
Thompson  v.  Beck  (Nev.)  40  Pac.  516.  Where,  on  accounting,  it  appears  that  the 
two  partners  were  to  advance  capital,  and  share  the  profits  equally,  the  amount 
advanced  by  one  partner  in  excess  of  another  should  first  be  given  him  out  of 


416  DISSOLUTION.  (C^-   ^ 

though,  as  has  been  seen,  partners  are  postponed  to  other  creditors 
of  the  firm  when  it  is  insolvent.  The  balance  remaining  represents 
the  value  of  the  interests  of  the  several  partners  in  the  firm,  and 
the  property  is  to  be  distributed  among  them  in  proportion  to  their 
shares  in  the  partnership. «»  The  rules  for  determining  what  each 
partner's  share  is  have  already  been  discussed.'*'* 

the  assets,  and  then  the  balance  divided  equally  between  them.  Chamberlain  v. 
Sawyers  (Ky.)  32  S.  W.  475.  The  excess  of  one  partner's  advances  over  those 
of  the  other  constitutes  a  preferred  claim  upon  the  partnership  property,  or  its 
proceeds.      Matthews  v.  Adams  (Md.)  33  Atl.  645. 

8  9  Capital  is  to  be  repaid  before  dividing  profits.  Rowland  v.  Miller,  7  Phila. 
(Pa.)  362;  Marquand  v.  Manufacturing  Co.,  17  Johns.  (N.  Y.)  525;  Livingston  v. 
Blanchard,  130  Mass.  341;  GunneU  v.  Bird,  10  Wall.  304;  Jackson  T.  Crapp,  32 
iud.  422;  Keaton  v.  Mayo,  71  Ga.  649.  Where  the  contract  of  partnership  formed 
for  two  years  makes  no  provision  for  settlement  on  dissolution,  on  the  death  of 
one  member  three  months  after  making  the  contract  the  survivor  cannot  maintaiu 
an  action  against  the  estate  of  decedent  tor  the  whole  consideration  paid  by  such 
survivor  for  the  contract.     Petrie  t.  Steedly,  94  Ga.  196,  21  S.  B.  612. 

••  Ante,  p.  132. 


§§  184-185) 


LIMITED    PARTNERSHIPS. 


417 


CHAPTER  X. 


LIMITED  PARTNERSHIPS. 


184-185.  General  Nature — Definitions. 

186-188.  Establishment  of  Relation. 

189-190.  Purposes. 

191.  Members,  General  and  SpedaL 

192.  Certificate. 

198.  Acknowledgment. 

194.  Record. 

195.  PublicatioQ. 

196.  Affidavit. 

197.  Contribution  of  General  and   Special  Fartnen. 

198.  Firm   N:ime. 

199.  Firm   Sign. 

200-201.  When  Partnership  Begins. 

202.  Renewals. 

203.  Rights  and  Liabilities. 
204-205.  Liability  for  Debts. 

206.  Defective  or  Delayed  Formation. 

207.  Effect  inter  Se. 

208-209.  Effect  as  to  Third  Persons. 

210.  Rights  in  Firm  Property. 

211-212.  Withdrawal  of  Profits  or  CapitaL 

213.  Alteration. 

214.  Interference. 
215-216.  Insolvency. 

217-218.  Fraudulent  Conveyances. 

219.  Property  a  Trust  Fund  for  Creditor*. 

220.  Assignment  for  Benefit  of  Creditors, 
221-222.  Special  Partner  as  Creditor, 

223.  Termination  of  Relation— Dissolution. 

224,  Termination  of  Future  Liability. 
225-226.  By  Operation  of  Law. 

227.  By  Act  of  Parties. 

228.  Change  from  Limited  to  General  Liability. 

229.  Actions — Between  Members. 

230.  Between  Firm  and  Third  Persona. 
GEO.PART,— 27 


418  LIMITED    PARTNERSHIPS.  (Oh.    10 


GENERAL  NATURE— DEFINITIONS. 

184.  "A  limited  partnership  is   a  partnership  in  which  the 

liability  of  some  of  its  members  to  bear  losses  is  re- 
stricted to  a  defined  amount.  As  such  an  immunity 
is  utterly  repudiated  in  the  common  law,  these  as- 
sociations are  •wholly  statutory." 

185.  A  special  partner  is   a  member  of  a  limited  partner- 

ship whose  liability  is  limited.  All  the  other  mem- 
bers are  called  general  partners. 

The  above  definition  is  taken  from  Bates.*  Another  admirable 
definition  is  j^ven  by  Parsons:  ^  "A  'limited  partnership,'  in  the 
present  sense  of  the  phrase,  is  one  in  which  one  or  more  of  the  part- 
ners are  so  in  the  usual  way,  in  respect  to  power,  property,  and 
obligation,  and  one  or  more  of  them  have  placed  a  certain  sum  in 
the  business,  and  may  lose  that,  but  are  not  liable  further."  The 
phrase  "limited  partnership''  has  come  to  be  almost  universally  ap- 
plied to  designate  this  class  of  associations,  although  the  term  "spe- 
cial partnership"  is  used  in  the  same  sense  in  the  statutes  of  a 
few  states.*  Care  should  be  taken  not  to  confuse  the  term  "special 
partnership,"  used  in  this  sense,  with  the  more  common  use  of  the 
term  to  designate  partnerships  created  for  a  single  transaction  or 
adventure,  sometimes  called  "particular  partnerships,"  as  already 
explained.*  So,  also,  the  term  "special  partner"  should  always  be 
used  to  mean  a  member  of  a  limited  partnership  with  a  limited  lia- 
bility. It  must  not  be  supposed  that  the  members  of  a  "special 
partnership,"  using  the  term  in  its  ordinary  sense,  are  necessarily 
"special  partners."  All  the  members  of  a  special  partnership  may 
be  general  partners,  and  in  fact  are  such  unless  the  special  partner- 
ship is  also  a  limited  one. 

1  Bates,  Lim.  Fartn.  §  1.  «  T,  Pars.  Partn.  §  421. 

3  CALIFORNIA:  Civ.  Code,  §  2477  et  seq.  DAKOTA:  Comp.  Laws  1887, 
8  4072.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4416.  OHIO:  Rev.  St.  1892, 
S  3161.     WYOMING:    Rev.  St.  1887.  §  4069. 

*  Ante,  p.  88. 


§§    184-185)  GENERAL    NATURE DEFINITIONS.  419 

Orig'm  and  Purpose  of  Limited  Partnerships. 

Limited  partnerships  were  unknown  to  the  common  law,  and  have 
never  been  adopted  in  England  except  in  the  form  of  joint-stock 
companies.  On  the  continent  of  Europe,  however,  thej  have  ex- 
isted ever  since  mediaeval  times.  The  system  was  first  introduced 
into  this  country  by  a  statute  of  New  York,  which  was  copied  sub- 
stantially from  the  French  Code  of  Commerce.  The  system  found 
a  ready  acceptance  in  this  country,  and  statutes  providing  for  the 
formation  of  limited  partnerships  are  found  in  most,  if  not  all,  the 
states  and  territories.  The  ancient  history  of  limited  partnerships 
is  interestingly  given  in  a  New  York  case  as  follows:  ^  "The  system 
of  limited  partnerships,  which  was  introduced  by  statute  into  this 
state,  and  subsequently  very  generally  adopted  in  many  other  states 
of  the  Union,  was  borrowed  from  the  French  Code.*  Under  the 
name  of  'la  society  en  commandite,'  it  has  existed  in  France  from 

6  Ames  V.  Dowuiug,  1  Bradf,  (N.  Y.)  321. 

*  3  Kent,  Comm.  36;  Code  de  Com.  19,  23,  2A.  The  theory  on  which  limited 
partnerships  are  established  was  well  stated  in  King  v.  Sarria,  69  N.  Y.  24,  as  fol- 
lows: '"Indeed,  it  is  as  agent  that  the  power  of  one  partner  to  bind  his  co-purtuer 
is  obtained  and  exercised.  The  law  of  partnership  is  a  branch  of  the  law  of 
principal  and  agent.  Cox  v.  Hickman,  8  H.  L.  Cas.  268;  Baring  v.  Lyman,  1 
Story,  396  [Fed.  Cas.  No.  983];  Worrall  v.  Munn,  5  N.  Y.  229.  In  the  case  first 
above  cited,— [Hawken  v.  Boiirne]  8  Mees.  &  W.  703,— it  is  added  that  any  re- 
striction which,  by  agreement  amongst  the  partners,  is  attempted  to  be  imposed 
upon  the  authority  which  one  partner  possesses  as  the  general  agent  of  the  other, 
is  operative  only  between  the  partners  themselves,  and  does  not  limit  the  authority 
as  to  third  persons,  who  acquire  rights  by  its  exercise,  unless  they  know  that 
such  restriction  has  been  made.  It  is  manifest,  however,  that  this  remark  is  to 
be  qualified,  when  taken  in  connection  with  any  statute  law,  which  has  provided 
for  the  formation  of  limited  partnerships,  where  that  statute  law  is  operative. 
A  due  observance  of  such  statutory  provisions  limits  the  liability  of  the  special 
partner.  It  limits,  too,  the  authority  of  the  general  partner,  as  the  agent  of  the 
special  partner,  and  fixes  beforehand  the  extent  to  which,  as  agent,  he  niiiy  bind 
•  the  special  partner.  It  is  hardly  necessary  to  say  that  when  a  limited  partnership 
is  duly  formed  and  carried  on  under  our  statute,  though  the  general  partner  is 
the  agent  for  all  the  partners,  with  powers  full  enough  to  transact  all  the  business 
of  the  firm,  and  to  bind  it  to  all  contracts  within  the  scope  of  that  business, 
ne  gets  no  authority,  from  his  relation  as  partner  and  agent  of  the  special  member 
of  the  firm,  to  fix  upon  him  greater  liability  than  that  which  has  been  stipulated 
for.  These  principles  are  stated  here,  not  as  new  or  forgotten  by  any  one,  but  as 
the  basis  upop  which  the  determination  of  this  case  will  rest." 


420  LIMITED    PARTNERSHIPS.  (Ch.   10 

the  time  of  the  Middle  Ages,  mention  being  made  of  it  in  the  most 
authentic  commercial  records,  and  in  the  early  mercantile  regala- 
tions  of  Marseilles  and  Montpelier.  In  the  vulgar  Latinity  of  the 
Middle  Ages  it  was  styled  'commenda,'  and  in  Italy  'accommenda.' 
In  the  statutes  of  Pisa  and  Florence,  it  is  recognized  so  far  back  as 
the  year  1166;  also,  in  the  ordinance  of  Louis  le  Hutin,  of  1315; 
the  statutes  of  Marseilles,  1253;  of  Geneva,  of  1588.  In  the  Middle 
Ages  it  was  one  of  the  most  frequent  combinations  of  trade,  and 
was  the  basis  of  the  active  and  widely-extended  commerce  of  the 
opulent  maritime  cities  of  Italy.  It  contributed  largely  to  the 
support  of  the  great  and  prosperous  trade  carried  on  along  the 
shores  of  the  Mediterranean,  was  known  in  Languedoc,  Provence, 
and  Lombardy,  entered  into  most  of  the  industrial  occupations  and 
pursuits  of  the  age,  and  even  traveled  under  the  protection  of  the 
arms  of  the  Crusaders  to  the  city  of  Jerusalem.  At  a  period  when 
capital  was  in  the  hands  of  nobles  and  clergy,  who,  from  pride  of 
caste,  or  canonical  regulations,  could  not  engage  directly  in  trade,  it 
afforded  the  means  of  secretly  embarking  in  commercial  enterprises, 
and  reaping  the  profits  of  such  lucrative  pursuits,  without  per- 
sonal risk;  and  thus  the  vast  wealth,  which  otherwise  would  have 
lain  dormant  in  the  coffers  of  the  rich,  became  the  foundation,  by 
means  of  this  ingenious  idea,  of  that  great  commerce  which  made 
princes  of  the  merchants,  elevated  the  trading  classes,  and  brought 
the  commons  into  position  as  an  influential  estate  in  the  common- 
wealth. Independent  of  the  interest  naturally  attaching  to  the 
history  of  a  merc^mtile  contract  of  such  ancient  origin,  but  so  re- 
cently introduced  where  the  general  partnership,  known  to  the  com- 
mon law,  has  hitherto  existed  alone,  I  have  been  led  to  refer  to  the 
facts  just  stated,  for  the  purpose  of  showing  that  the  special  part- 
nership is,  in  fact,  no  novelty,  but  an  institution  of  considerable 
antiquity,  well  known,  understood,  and  regulated.  Ducange  defines 
it  to  be  'Societas  mercatorem  qua  uni  sociorum  tota  negotiationis. 
cura  commendatur,  certis  conditionibus.'  It  was  always  considered 
a  proper  partnership  ('societas'),  ith  certain  reserves  and  restric- 
tions; and  in  the  ordinance  of  Louis  XIV.,  of  1673,  it  is  ranked  as 
a  regular  partnership.  In  the  Code  of  Commerce  it  is  classed  in 
the  same  manner." 
The  purpose  of  the  law  in  permitting  limited  partnership  has  been 


§§    lSG-188)  ESTABLISHMENT    OF   RELATION.  421 

stated  bj  various  authorities  as  follows:  "It  is  to  encourage  and  fa- 
cilitate trade  and  commerce,  and  induce  capitalists  to  embark  their 
capital  therein,  or  a  certain  part  of  their  capital,  by  relieving  them 
from  the  peril,  hanging  over  all  partnership  by  the  common  law  mer- 
chant, of  losing  not  only  all  they  have  in  the  trade,  but  all  they  have 
besides."  ®  "The  object  is  to  enable  the  capitalist  to  employ  his 
wealth  in  trade  without  risking  more  than  he  originally  subscribed, 
and  at  the  same  time  to  secure  the  co-operation  of  men  of  integrity 
and  ability,  but  without  means.''  ^  The  object  is  "to  encourage  the 
employment  of  capital,  without  personal  activity  on  the  part  of  its 
owners,  by  associating  it  with  industry  and  enterprise  which  might 
not  be  possessed  of  capital."  ®  'Tor  many  years  it  has  been  deem- 
ed desirable  for  the  benefit  of  trade,  and  to  aid  young  men  of  in 
tegrity  and  capacity,  but  without  means,  that  these  limited  part 
nerships  should  be  formed." "  A  limited  partnership  is  essentially 
a  union  of  labor  and  capital.^"  According  to  Bates,^^  the  abject  is 
"the  bringing  into  co-operation,  for  mutual  and  public  benefit,  men 
having  capital,  and  willing  to  risk  a  limited  amount  of  it,  provided 
the  hazards  of  the  enterprise  would  not  involve  their  private  fortunes 
beyond  a  calculable  decree,  and  men  without  capital,  but  with  en- 
terprise, skill,  and  capacity,  and  thus  develop  the  industrial  pros- 
perity of  the  country  by  enlisting  the  energy  and  diligence  of  the 
young  with  the  dormant  accumulations  of  the  more  advanced." 

ESTABLISHMENT  OF   RELATION. 

186.  A  limited  partnersliip  cannot  exist  unless  authorized 

by  statute. 

187.  In  addition  to  the  essentials  of  an  ordinary  partner- 

ship, all  the  requirements  of  the  statute   must  be 
observed. 

188.  The  general  purpose  underlying  the  various  statutory 

provisions  is  the   protection    of  persons  -who  deal 
with  the  firm.     The  provisions  relating  to  the  forma- 

•  T  Pars.  Partn.  §  421.  t  13  Am.  &  Bng.  Enc  Law,  100, 

«  Singer  v.  Kelly,  44  Pa.  St.  145,  149. 

»  Riper  v.  Poppenhausen,  43  N.  Y.  68,  73. 

19  Levi,  Merc  Law,  215.  »i  Lim.  Partn.  f  10. 


422  LIMITED    PARTNERSHIPS.  (Cb.    10 

tion  of  the  partnership  will  be  treated   under  the 
follo-wlng  heads: 

(a)  Purposes  (p.  423). 

(b)  Members,  general  and  special  (p.  428). 

(c)  Certificate  (p.  429). 

(d)  Affidavit  (p.  441). 

(e)  Contribution  of  special  partner  (p.  442). 

(f)  Name  and  sign  of  firm  (p.  445). 

Gonstrvxition  of  Statutes. 

The  idea  of  limiting  one  partnei^'s  liability  to  such  a  sum  as  he 
is  willing  to  invest  in  the  business  is  wholly  repugnant  to  the  com- 
mon law.  The  possibility  of  doing  so  therefore  rests  solely  on 
statute.  Unless  the  statutory  requirements  are  substantially  com 
plied  with,  a  limited  partnership  is  not  formed,  and  all  the  partners 
are  liable  as  general  partners  in  ordinary  partnerships.  The  stat- 
utes must  be  construed  with  reference  to  the  common  law,  which 
has  been  said  to  be  "the  strong  enemy  of  limited  partnerships."  ^- 
But  the  courts  are  not  agreed  as  to  whether  the  statutes  should  be 
construed  strictly  or  liberally.  Thus,  on  the  one  hand,  it  is  said 
that  the  statutes  should  be  strictly  construed,  because  in  derogation 
of  the  common  law.^'      "The  parties  cannot  claim  under  the  stat 

12  Jacquin  v.  Buisson,  11  How.  Prac.  (N.  Y.)  385,  393. 

18  Duraut  v.  Abendiath,  41  N.  Y.  Sui)er.  Ct.  53,  59;  Henkel  v.  Heyman,  91  111. 
96;  Pears  v.  Barnes  (Pa.)  1  Atl.  658;  Pierce  v.  Bryant,  5  Allen  (Mass.)  91,  The 
object  of  the  statute  in  providing  for  the  formation  of  limited  partnerships  was 
to  compel  those  who  claim  the  benefits  of  its  exemptions  to  give  public  notice  of 
the  terms  of  the  partnership,  that  all  who  deal  with  it  may  know  the  extent  of 
the  credit  and  liabihty  which  it  assumes.  It  was  also  intended  for  the  mutual 
protection  of  the  special  partner  and  those  deahng  with  him,  and  should  be  construed 
in  the  spirit  with  which  it  was  framed.  All  that  the  law  requires  in  the  forma- 
tion of  a  limited  partnership  is  a  substantial  compliance  with  its  provisions.  The 
filing  of  the  certificate  and  afladavit  required,  28  days  after  they  were  executed, 
could  not  affect  the  validity  of  the  partnership  as  to  those  who  dealt  with  it 
after  the  date  of  such  filing.  Levy  v.  Lock,  47  How.  (N.  Y.)  394.  Where  a 
special  partnership  was  attempted  to  be  formed  accordmg  to  the  statute,  but 
in  one  of  the  newspapers  in  which  the  terms  were  published  the  sum  contributed 
by  the  special  partner  was,  by  mistake  of  the  printer,  slated  at  $5,000,  instead  of 
$2,000,  which  was  the  true  sum  mentioned  in  the  certificate,  Udd,  that  the  asso- 
ciates were  all  liable  as  general  partners.     Argall  v.  Smith,  3  Denio  (N.  Y.)  435. 


§§  189-190)  PURPOSES.  423 

ute,  which  derogates  from  the  general  rule  of  law,  without  showing 
a  strict  compliance  with  the  statute."  ^*  On  the  other  hand,  the 
statutes  have  been  considered  as  remedial  in  their  nature  and  en- 
titled to  a  liberal  construction.  Thus,  the  New  York  court  of  ap 
peals  said:  "This  may  well  be  regarded  as  a  remedial  statute,  and 
it  should  receive  a  liberal  construction,  with  a  view  'to  suppress  the 
mischief  and  advance  the  remedy.' "^"^  Generally,  a  substantial 
compliance  with  the  statute  is  all  that  is  required,  though  some 
courts  say  that  the  compliance  must  be  strict,  and  some  both  strict 
and  substantial.^'  Bates  suggests  ^^  that  the  statutes  are  framed 
with  a  double  object:  (1)  To  induce  the  investment  of  capital  in 
business;  and  (2)  the  protection  of  persons  dealing  with  the  firm, — 
and  that  the  "provisions  for  the  protection  of  third  persons  are  to 
be  liberally  construed  in  favor  of  such  persons,  which  means  strictly 
against  the  special  partner;  and  provisions  which  cannot  affect  the 
rights  of  third  persons  will  be  liberally  construed,  so  as  not  to  for- 
feit the  protection  of  the  statute  without  reason." 

SAME— PURPOSES. 

189.  Limited  partnerships  can  be  formed  only  to   engage 

in  businesses  authorized  by  statute.  The  stat- 
utory authority  is  usually  confined  to  a  mercantile, 
mechanical,  or  manufacturing  business. 

190.  Nearly  all  the  statutes  prohibit  limited  partnerships 

from  engaging  in  insurance  or  banking. 

14  In  re  Merrill,  12  Blatchf.  221,  Fed.  Cas.  No.  9,467. 

16  Riper  V.  Poppenhausen,  43  N.  Y.  08,  73.  And  see  Johnson  v.  McDonald,  2 
Abb.  Prac.  (N.  Y.)  290;  Bowen  v.  Argall,  24  Wend.  (N.  Y.)  496;  Clapp  v.  Lacey, 
ii5  Conn.  463;   Pfirmann  v.  Henkel,  1  111.  App.  145. 

i«  HoUiday  v.  Paper  Co.,  3  Colo.  342;  Argall  ▼.  Smith,  3  Denio  (N.  Y.)  435; 
Levy  V.  Lock,  47  How.  Prac  (N.  Y.)  394. 

IT  Lim.  Partn.  §  13. 


424  LIMITED    PABTNERSHIPd.  (Ch.    10 

Authorized  Businesses. 

Limited  partnerships  may,  in  the  several  states,  be  formed  for 
any  mercantile  business;  ^®  for  any  mechanical  business;  ^®  for  any 
manufacturing  business.^"      These  are  the  most  common  statutory 

18  ALABAMA:  Code  1886,  §  1705.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5447.  DELAWARE:  Rev.  Code  1893,  c.  64,  §  1.  DISTRICT  OF  COLUM- 
BIA: Comp.  St.  1894,  c.  43,  §  1.  FLORIDA:  McClel.  Dig.  1881,  p.  796.  §  1. 
GEORGIA:  Code  1882,  §  1920.  KANSAS:  Gen.  St  1889,  par.  3977.  KEN- 
TUCKY: St.  1894,  c.  94,  §  3767.  MAINE:  Rev.  St.  1883,  c.  33,  §  1.  MARY- 
LAND: Code  1888,  art.  73,  §  1.  MICHIGAN:  How.  Ann.  St.  1882,  §  2341. 
MINNESOTA:  Gen.  St.  1894,  §  2330.  MISSISSIPPI:  Code  1892,  §  2764. 
MISSOURI:  Rev.  St  1889,  §  7195.  NEBRASKA:  Comp.  St  1893,  p.  1,  c. 
65,  §1.  NEVADA:  Gen.  St  1885,  §  4905.  NEW  JERSEY:  Gen.  St  1895,  p. 
2437,  "Partnership,"  {  1.  NEW  YORK:  Rev.  St.  (9th  Ed.)  p.  1843,  §  1. 
NORTH  CAROLINA:  Code  1883,  §  3088.  OHIO:  Rev.  St  1892,  §  3141. 
OREGON:  Hill's  Ann.  Lawa  1892,  §  3848.  PENNSYLVANIA:  Pepper  &  L. 
Dig.  p.  2687,  "Limited  Partnership,"  §  1.  RHODE  ISLAND:  Gen.  Laws  1896, 
c.  157,  §  1.  SOUTH  CAROLINA:  Rev.  St  1893,  §  1407.  TENNESSEE: 
MUl.  &  V.  Code  1884,  §  2399.  TEXAS:  Rev.  St  1895,  art  3583.  UTAH: 
Comp.  Laws  1888,  §  2473.  VERMONT.  St.  18^,  §  4276.  VIRGINIA:  Code 
1887,  c.  135,  §  28G3.  WASHINGTON:  Hill's  Code  1891,  §  2917.  WEST  VIR- 
GINIA: Code  1891,  c  100,  §  1.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  f 
1703. 

i»  ALABAMA:  Code  1886,  §  1705.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  \ 
5447.  DELAWARE:  Rev.  Code  1893,  c.  64,  \  1.  DISTRICT  OP  COLUM- 
BIA:  Comp.  St.  1894,  c.  43,  §  1.  FLORIDA:  McClel.  Dig.  1881,  p.  796,  §  1. 
GEORGIA:  Code  1882,  §  1920.  KANSAS:  Gen.  St  1889,  par.  3977.  KEN- 
TUCKY: St.  1894,  c.  94,  §  3767.  MAINE:  Rev.  St  1883,  c.  33,  §  1.  MARY- 
LAND:  Code  1888,  art  73,  §  1.  MICHIGAN:  How.  Ann.  St  1882,  §  2341. 
MINNESOTA:  Gen.  St  1894,  §  2330.  MISSOURI:  Rev.  St  1889,  §  7195. 
NEBRASKA:  Comp.  St.  181)3,  c.  65.  §  1.  NEVADA:  Gen.  St.  1885,  §  4905. 
NEW  JERSEY:  Gen.  St  1895,  p.  2437,  "Partnership,"  §  1.  NEW  YORK: 
Rev.  St  (9th  Ed.)  p.  1843,  §  1.  NORTH  CAROLINA:  Code  1883,  S  3088. 
OHIO:  Rev.  St  1892,  §  3141.  OREGON:  HiU's  Ann.  Lawa  1892,  §  3848. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  p.  2687,  "Limited  Partnership,"  §  1. 
RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  1.  SOUTH  CAROLINA:  Rev. 
St  1893,  §  1407.  TENNESSEE:  Mill  &  V.  Code  1884,  §  2399.  TEXAS:  Rev. 
St  1895,  art  3583.  UTAH:  Comp.  Laws  1888,  §  2473.  VERMONT:  St  1894, 
§  4276.  VIRGINIA:  Code  1887,  §  2863.  WASHINGTON:  Hill's  Ann.  Code 
1891,  §  2917.  WEST  VIRGINIA:  Code  1891,  c  100,  §  L  WISCONSIN: 
Sanb.  &  B.  Ann.  St  1889,  §  1703. 

20  ALABAMA:  Code  1886,  §  1705.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  9 
5447.    DELAWARE:    Lawa  1893,   c.   64,  %  \.    DISTRICT  OF   COLUMBIA 


§§  189-190)  PURPOSES.  425 

provisions.  In  one  or  more  states,  limited  partnerships  are  author- 
ized to  engage  in  the  following  businesses:  Any  commercial  busi- 
ness; ^^  mining;  ^*  transportation  ^'  (in  Pennsylvania,  of  coal  only^*); 
agricultural  business;^"*  "any  work  of  improvement";"  construc- 
tion of  roads,  railways,  canals,  etc.;'^  or  for  any  lawful  trade  or 
business.^* 

Comp.  St.  1894,  c.  43,  §  1.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  1.  GEOR- 
GIA: Code  1882,  §  1920.  KANSAS:  Geu.  St.  1889,  par.  3977.  KENTUCKY: 
St.  1894,  c.  94,  §  3767.  MAINE:  Rev.  St.  188S,  c.  33,  §  1.  MARYLAND: 
Code  1888,  art.  73,  §  1.  MICHIGAN:  How.  Ann.  St.  1882,  §  2341.  MINNE- 
SOTA: Gen.  St.  1894,  §  2330.  MISSISSIPPI:  Code  1892,  §  2764.  MIS- 
SOURI: Rev.  St.  1889,  §  7195.  NEBRASKA:  Comp.  St  1893,  c.  65,  §  1. 
NEVADA:  Gen.  St.  1885,  §  4905.  NEW  JERSEY:  Gen.  St.  1S95,  p.  2437,  § 
1.  NEW  YORK:  Rev.  St.  (9th  Ed.)  p.  1843,  §  1.  NORTH  CAROLINA:  Code 
1883,  §  3088.  OHIO:  Rev.  St.  1892,  §  3141.  OREGON:  Hill's  Ann.  Laws 
1892,  §  3848.  PENNSYLVANIA:  Pepper  &  L.  Dig.,  "Limited  Partnership,"  § 
1.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  1.  SOUTH  CAROLINA: 
Rev.  St.  1893,  §  1407.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2399.  TEXAS: 
Rev.  St.  1895,  art.  3583.  UTAH:  Comp.  Laws  1888,  §  2473.  VERMONT:  St. 
1894,  §  4276.  VIRGINIA:  Code  1887,  §  2863.  WASHINGTON:  Hill's  Ann. 
Code  1891,  §  2917.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  1.  WISCONSIN: 
Sanb.  &  B.  Ann.  St.  1889,  §  1703. 

21  ARKANSAS:  Sand.  &  H.  Dig.  1894,  §  {>473.  FLORIDA:  McClel.  Dig. 
1881.  c.  159,  §  1.  GEORGIA:  Code  1882,  §  1920.  MISSISSIPPI:  Cx)de  1892, 
S  2764. 

2  2  GEORGIA:  Code  1882,  §  1920.  KENTUCKY:  St.  1894,  c.  94,  §  3767. 
MISSOURI:  Rev.  St.  1889,  §  7195.  NEVADA:  Gen.  St.  1885,  §  4905.  OHIO: 
Rev.  St.  1892,  §  3141.  PENNSYLVANIA:  Pepper  &  L.  Dig.,  "Limited  Part- 
nership," §  1.  TENNESSEE:  MUl.  &  V.  Code  1884,  $  2399.  UTAH:  Comp. 
Laws  1888,  §  2473. 

23  MISSOURI:  Rev.  St.  1889,  i  7195.  SOUTH  CAROLINA:  Rev.  St.  1893. 
S  1407. 

24  Pepper  &  L.  Dig.,  "Limited  Partnership,"  §  1. 

26  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  1.  GEORGIA:  Code  1882,  § 
1920.  KENTUCKY:  St.  1894,  c.  94,  §  3767.  MISSOURI:  Rev.  St.  1889,  § 
7195.  PENNSYLVANIA:  Pepper  &  L.  Dig.,  "Limited  Partnership,"  f  1. 
TENNESSEE:    Mill.  &  V.  Code  1884,  §  2399. 

26  MISSISSIPPI:    Code  1892.  §  2764. 

27  ARKANSAS:    Sand.  &  H.  Dig.  1894,  §  5473. 

28  CALIFORNIA:  Civ.  Code  1886,  §  2477.  COLORADO:  Mills'  Ann.  St. 
1891,  §  3369.  CONNECTICUT:  Gen.  St.  1888,  §  3276.  DAKOTA:  Comp. 
Laws  1887,  §  4072.  IDAHO:  Rev.  St.  1887,  §  3270.  INDIANA:  Rev.  St 
1894,  §  8109.    IOWA:    McCLAIN's  Code,   1888,  §  3330.    MASSACHUSETTS: 


426  "  LIMITED    PARTNERSHIPS.  (Ch.    10 

Prohibited  JBusinesses. 

Limited  partnerships  are  very  generally  prohibited  from  carry- 
ing on  a  banking  business,"  a  brokerage  business,^"  and  an  insurance 
business.'^      In  Arkansas,  however,  they  are  authorized  to  engage 

Pub.  St.  1882,  c.  75,  §  1.  NEW  YORK:  Rct.  St.  (9th  Ed.)  p.  1843,  §  1. 
NORTH  DAKOTA:  Rev.  Code  1895,  §  4416.  TEXAS:  Rev.  St.  1895,  art. 
3583.  WYOMING:  Rev.  St.  1887,  §  4069.  See  Benedict  v.  Van  Allen,  17  U. 
C.  Q.  B.  234,  for  a  case  where  the  purpose  of  the  partnership  was  held  not  suf- 
ficiently described  by  the  term  "general  business."  There  is  no  material  variance 
between  the  certificate  of  formation  of  a  limited  partnership,  expressing  the  nature 
of  the  business  to  be  "a  general  commission  business,  buying  and  selling  grain, 
flour,  and  produce  on  commission,  '  and  the  published  notice,  stating  the  business 
to  be  "for  the  purpose  of  conducting  a  general  commission  business."  Manhattan 
Co.  V.  Phillips,  109  N.  Y.  383.  17  N.  E.  129. 

29  ALABAMA:  Code  1886,  §  1705.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  § 
.^447.  CALIFORNIA:  Civ.  Code  1886,  §  2477.  CONNECTICUT:  Gen.  St. 
1888,  §  3276.  DAKOTA:  Comp.  Laws  1887,  §  4072.  DELAWARE:  Rev. 
Code  1893,  c.  64,  §  1.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  $  1.  GEORGIA: 
Code  1882,  §  1920.  IDAHO:  Rev.  St.  1887,  §  3270.  KANSAS:  Gen.  St.  1889, 
par.  3977.  KENTUCKY:  St.  1894,  c.  94,  §  3767.  MAINE:  Rev.  St.  1883,  c. 
33,  §  1.  MICHIGAN:  How.  Ann.  St  1882,  §  2341.  MINNESOTA:  Gen.  St. 
1S94,  §  2330.  MISSOURI:  Rev.  St.  1889,  §  7195.  MONTANA:  Civ.  Code 
1895,  §  3290.  NEBRASKA:  Comp.  St.  1893,  c.  65,  §  1.  NEVADA:  Gen.  St. 
1885,  §  4905.  NEW  HAMPSHIRE:  Pub.  St.  1891,  c.  122,  fi  1.  NEW  JER- 
SEY: Gen.  St  1895,  "Partnership,"  §  1.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt 
2,  c.  4,  tit  1,  §  1.  NORTH  CAROLINA:  Code  1883,  §  3088.  NORTH  DA- 
KOTA: Rev.  Code  1895,  §  4416.  OHIO:  Rev.  St  1892,  §  3141.  PENNSYL- 
VANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  1.  RHODE  IS- 
LAND: Gen.  Laws  1896,  c.  157,  §  1.  SOUTH  CAROLINA:  Rev.  St  1893,  § 
1407.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2399.  TEXAS:  Rev.  St  1895, 
art.  3583.  UTAH:  Comp.  Laws  1888,  §  2473.  VERMONT:  St  1894,  §  4276. 
VIRGINIA:  Code  1887,  §  2803.  WEST  VIRGINIA:  Code  1891,  c.  100,  § 
1.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  |  1703.  WYOMING:  Rev.  St. 
1887,  §  4069. 

30  KENTUCKY:  St  1894,  c,  94,  §  3767.  MISSOURI:  Rev.  St  1889,  §  7195. 
VIRGINIA:    Code  1887,  §  2863.    WEST  VIRGINIA:    Code  1891,  c.   100,  §  1. 

31  ALABAMA:  Code  1886,  §  1705.  CALIFORNIA:  Civ.  Code  1886,  §  2477. 
CONNECTICUT:  Gen.  St  1888,  §  3276.  DAKOTA:  Comp.  Laws  1887,  § 
4072.  DELAWARE:  Rev.  Code  1893,  c.  64,  §  1.  FLORIDA:  McClel.  Dig. 
1881,  c.  159,  §  1.  GEORGIA:  Code  1882,  §  1920.  IDAHO:  Rev.  St  1887,  § 
3270.  INDIANA:  Rev.  St.  1894,  §  8109.  KANSAS:  Gen.  St.  1889,  par.  3977. 
KENTUCKY:  St.  1894,  c.  94,  §  3767.  MAINE:  Rev.  St  1883,  c.  33,  §  1. 
MARYLAND:    Code   1888,    art    73,   §    1;    Laws    1880,    c.    483.    MASSACHU- 


§§  189-190)  PURPOSES.  427 

in  insurance  business,^^  and  in  Maryland  to  engage  in  the  banking 
business.^*  In  Florida,  limited  partnerships  cannot  engage  in  the 
railroad  or  canal  business.^* 

Effect  of  Engaging  vn  Unauthorized  Business. 

Where  a  limited  partnership  is  attempted  to  be  formed  for  a  pur- 
pose not  authorized  bj  statute,  or  for  a  purpose  prohibited  by  stat- 
ute, the  result  is  that  an  ordinary  or  general  partnership,  and  not 
a  limited  one,  is  formed.  Thus,  in  McGehee  v.  Powell,'"*  the  par- 
ties attempted  to  form  a  limited  partnership  to  transact  a  banking 
business.  In  Alabama,  limited  partnerships  are  prohibited  from 
carrying  on  a  banking  business.  The  partners  were  held  to  be  all 
general  partners,  and  each  liable  in  solido  for  the  debts.  The  fact 
that  the  body  is  not  a  legal  limited  partnership  does  not  affect  the 
validity  of  its  contracts.  The  only  result  is  that  all  the  partners  are 
equally  liable  in  solido. 

Conflict  of  La/ws. 

Limited  partnerships  cannot  usually  be  formed  for  the  purpose 
of  transacting  business  in  another  state.      Indeed,  most  of  the  stat- 

SETTS:  Pub.  St.  1882,  c.  75,  §  1.  MICHIGAN:  How.  Ann.  St.  1882,  §  2341. 
MINNESOTA:  Gen.  St.  1894,  §  2330.  MISSOURI:  Rev.  St.  1889,  §  7195. 
MONTANA:  Civ.  Code  1895,  §  3290.  NEBRASKA:  Comp.  St.  1893,  c.  65,  § 
1.  NEVADA:  Gen.  St.  1885,  §  4905.  NEW  HAMPSHIRE:  Pub.  St.  1891, 
c.  122,  §  1.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  1.  NEW  YORK: 
Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  1.  NORTH  CAROLINA,  Code  1883,  § 
3088.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4416.  OHIO:  Rev.  St.  1892, 
§  3141.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894  "Limited  Partnership,"  § 
1.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §1.  SOUTH  CAROLINA: 
Rev.  St.  1893,  §  1407.  TENNESSEE:  Mill  &  V.  Code  1884,  §  2399.  TEXAS: 
Rev.  St,  1895,  art  3583.  UTAH:  Comp.  Laws  1888,  §  2473.  VERMONT:  St. 
1894,  §  4276.  VIRGINIA:  Code  1887,  §  2863.  WEST  VIRGINIA:  Code  1891, 
c.  100,  §  1.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889.  §  1703.  WYOMING: 
Rev.  St.  1887,  §  4069. 

82  ARKANSAS:    Sand.  &  H.  Dig.  1894,  §  5473. 

88  MARYLAND:    Code  1S88,  art.  73,  §  1;    Laws  1880,  c.  482. 

84  FLORIDA:    McClel.  Dig.  1881,  c.  159,  §  1. 

38  8  Ala.  827.  Every  one  trading  with  a  limited  partnership  is  charpeable 
with  notice  as  to  the  scope  and  range  of  the  business  of  the  partnership,  and  as  set 
forth  in  the  articles,  when  the  same  have  been  filed  and  made  known  according  to 
law.  Taylor  v.  Rasch,  1  Flip.  385,  11  N.  B.  R.  91,  1  Cent.  Law  J.  555.  31  I^g. 
Int  365,  Fed.  Cas.  No.  13,800. 


428  LIMITED    PARTNERSHIPS.  (Ch.    10 

utes,  by  their  terms,  only  authorize  such  partnerships  for  the  pur- 
pose of  doing  business  in  the  state  under  whose  laws  they  are  or- 
ganized. A  firm  formed  for  the  purpose  of  doing  business  in  an- 
other state  would  be  a  general  partnership  in  both  states.  But  a 
limited  partnership  carrying  on  business  in  the  state  under  whose 
laws  it  was  organized  may  have  business  transactions  in  other 
states.^®  In  such  cases,  the  liability  of  the  special  partner  and  the 
authority  of  general  partners  to  bind  him  on  contracts  made  in  a 
foreign  state  will  be  determined  by  the  laws  of  the  state  where  the 
firm  is  located,*^  and  the  construction  and  enforcement  of  the  con- 
tract and  the  nature  and  extent  of  the  liability  of  the  partnership 
will  be  determined  by  the  laws  of  the  state  in  which  the  contract 
was  made."* 

SAME— MEMBERS,  GENERAL  AND  SPECIAL. 

191.  Liimited  partnerships  must  consist  of  both  general  and 
special  partners.  Some  statutes  regulate  the  num- 
ber of  each. 

Limited  partnerships  consist  of  one  or  more  (in  Washington,  two 
or  more  '*)  persons,  who  are  general  partners,  and  liable  as  such, 
and  of  one  or  more  (in  Washington,  two  or  more,  and  in  Maryland 
and  the  District  of  Columbia  the  number  cannot  exceed  six  ***)  per- 
sons who  are  special  partners,  and  merely  contribute  capital  to  the 
common  stock.** 

3  8  King  V.  Sarria,  69  N.  Y.  24;  Rosenberg  v.  Block,  50  N,  Y.  Super.  Ct.  357; 
Lawrence  v.  Bateheller,  131  Mass.  504;  Gray  v.  Gibson,  6  Mich.  300;  Hastings 
V.  Hopkinson,  28  Vt.  108. 

8T  Locke  V.  Lewis,  124  Mass.  1;  Lawrence  v.  Bateheller,  131  Mass.  504;  King 
V.  Sarria,  69  N.  Y.  32;  Gray  v.  Gibson,  6  Mich.  .100;  Hastings  v.  Hopkinson, 
28  Vt,  108;  Hogg  v.  Orgill,  34  Pa.  St.  344;  Taylor  v.  AV.hster,  39  N.  J.  Law, 
102.     And  see  Ward  v,  Newell,  42  Barb.  (N.  Y.)  482. 

88  Rosenberg  v.  Block,  50  N.  Y.  Super.  Ct.  357;  Jacquin  v.  Buisson,  11  IJiMV. 
Prac.  (N.  Y.)  385;  Hogg  v.  Orgill,  34  Pa.  St.  344;  Barrows  v.  Downs,  9  R.  1 
446.     And  see  13  Am.  &  Eng.  Enc.  Law,  819. 

8»  WASHINGTON:     Gen.  St.  1891.  §  2917. 

40  MARYLAND:     Code  1888,  art.  73,  §  2. 

41  ALABAMA:  Code  1886,  §  1706.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
{  544&     CALIFORNIA:    Civ.  Code,  1886,  §  2478.     COLORADO:    Mills'  Ann. 


192)  CERTIFICATE.  429 


SAME— CERTIFICATE. 

192.  Persons  forming  a  limited  partnership  must  make 
and  severally  sign  a  certificate  containing  a  state- 
ment of  the  facts  required  by  statute. 

The  persons  desirous  of  forming  a  limited  partnersliip  must  make 
and  severally  sign  a  certificate  which  shall  contain  certain  facts  re 
quired  by  statute.*"     These  facts  are  the  following:     (1)  The  name 

St  1891,  §  3370.  CONNECTICUT:  Gen.  St.  1888.  §  3277.  DAKOTA:  Comp. 
Laws,  1887,  §  4073.  DELAWARE:  Rev.  Code  1893,  c.  64,  §  2.  DISTRICT 
OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  2.  FLORIDA:  McClel.  Dig.  1881. 
c.  159,  §  1.  GEORGIA:  Code  1882,  §  1921.  IDAHO:  Rev.  St.  1887,  §  3271. 
ILLINOIS:     2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  2.     INDIANA:     Rev.   St. 

1894,  §  8110.  IOWA:  McClain's  Code  1888,  §  3331.  KANSAS:  Gen.  St. 
1889,  par.  3978.  KENTUCKY:  St.  1894,  c.  94,  §  3768.  MAINE:  Rev.  St. 
1883,  c.  S3,  §  1.  MARYLAND:  Code  1888,  art.  73,  §  2.  MASSACHUSETTS: 
Pub.  St.  1882,  c.  75,  §  2.  MINNESOTA:  Gen.  St.  1894,  §  2331.  MISSIS- 
SIPPI: Code  1892,  §  2765.  MONTANA:  Civ.  Code  1895,  §  3291.  NE- 
BRASKA: Comp.  St.  1893,  c.  65,  §  2.  NEVADA:  Gen.  St  1885,  §  4906. 
NEW  HAMPSHIRE:     Pub.  St  1891,  c.  122,  §  1.     NEW  JERSEY:     Gen.  St. 

1895,  "Partnership,"  §  2.  NEW  YORK:  Rev.  St  (9th  Ed.)  p.  2,  c.  4,  tit.  1, 
§  2.  NORTH  CAROLINA:  Code  1883,  §  3089.  NORTH  DAKOTA:  1895. 
§  4417.  OHIO:  Rev.  St  1892,  §  3142.  OREGON:  2  Hill's  Ann.  Laws  1892. 
§  3849.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership," 
§  2.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  2.  SOUTH  CAROLINA: 
Rev.  St  1893,  §  1408.  TEXAS:  Rev.  St.  1895,  art.  3584.  UTAH:  Comp. 
Laws  1888,  §  2474.  VERMONT:  St.  1894,  §  4277.  VIRGINIA:  Code  1887, 
§  2864.  WASHINGTON:  Gen.  St  1891,  §  2918.  WEST  VIRGINIA:  Code 
1891,  0.  100,  §  2.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  §  1704.  WYO- 
MING: Rev.  St.  1887,  §  4070.  An  act  which  requires  not  less  than  three  persons 
to  unite  to  form  a  limited  partnership  is  complied  with  where  two  of  the  persons 
uniting  are  married  women,  and  the  others  are  their  husbands.  Bernard  &  Leas 
Manuf  g  Co,  v.  Packard  &  Calvin,  12  C.  C.  A.  123,  64  Fed.  309.  A  special 
partner  cannot  be  made  liable  as  a  general  partner  because  one  of  the  general 
partners,  under  the  contract  of  partnership,  was  an  infant,  where  it  does  not 
appear  that  the  infant  has  repudiated  the  contract,  or  attempted  to  avoid  its 
obligations.  Continental  Nat  Bank  v.  Strauss  (Super.  N.  Y.)  17  N.  Y.  Supp. 
188,  affirmed.     Id.,  137  N.  Y.  148,  553,  32  N.  E.  1066. 

42  ALABAMA:     Code    1886,    §    1708.     CALIFORNIA:     Civ.    Code    1886,    S 
2479.     COLORADO:     Mills'  Ann.  St  1891,  §  3372.      CONNECTICUT:      Gen. 


430  LIMITED    PARTNERSHIPS.  (Ch.    10 

or  firm  under  which  such  partnership  is  to  be  conducted  (except  in 
New  Mexico  *').  (2)  The  general  nature  of  the  business  to  be  con- 
ducted (except  in   Connecticut  **  and  New  Mexico,*"*  and  in  New 

St.  1888.  §  3279.  DAKOTA:  Comp.  Laws  1887,  §  4074.  DELAWARE: 
Rev.  Code  1803,  c.  64,  §  3.  DISTRICT  OF  COLU.MBIA:  Comp.  St.  1894, 
c.  43,  §■  5.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  2.  GEORGIA:  Code 
1882,  §  1923.  IDAHO:  Rev.  St.  1887,  §  3272.  ILLINOIS:  2  Starr  &  C. 
Ann.  St.  1896,  c.  84,  §  4.  INDIANA:  Rev.  St.  1894,  §  8111.  IOWA:  Mc- 
Clain's  Code  1888,  §  3333.  KANSAS:  Gen.  St.  1889.  par.  3980.  MAINE: 
Rev.  St.  1883,  c.  33,  §  2.  MARYLAND:  Code  1888,  art.  73,  §  3.  MASS- 
ACHUSETTS: Pub.  St.  1882.  c.  75,  §  4.  MICHIGAN:  How.  Ann.  St.  1882. 
§  2344.  MINNESOTA:  Gen.  St.  1894,  §  2333.  MISSISSIPPI:  Code  1892, 
§    2766.     MONTANA:     Civ.    Code    1895,    §   3292.     NEBRASKA:     Comp.    St. 

1893,  c.  65,  §  4.  NEVADA:  Gen.  St.  1885,  §  4907.  NEW  HAMPSHIRE: 
Pub.  St.  1891,  c.  122,  §  3.  NEW  .JERSEY:  Gen.  St.  1895,  "Partnership,"  §  4. 
NEW  MEXICO:  Comp.  Laws  1S84,  §  1801.  NEW  YORK:  Rev.  St.  (9tb 
Ed.)  pt.  2,  c.  4,  tit.  1.  §  4.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4418. 
OHIO:  Rev.  St.  1892,  §  3143.  OREGON:  2  Hill's  Ann.  Laws  1892,  5  3850. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  5. 
RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  3.  SOUTH  CAROLINA: 
Rev.  St.  1893,  §  1410.      UTAH:      Comp.  Laws  1888.  §  2476.      VERMONT:      St. 

1894,  §  4278.  VIRGINIA:  Code  1887,  §  286.'..  WASHINGTON:  Gen.  St. 
1891,  §  2919.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  i  1705.  WYOMING: 
Rev.  St.  1887,  §  4071.  The  articles  of  association,  with  accompanying  schedules, 
required  by  the  limited  partnership  act,  should  conform  fully  to  all  its  provisions, 
and  be  self-explanatory  and  self-sustaining,  and  cannot  be  supplemented  or 
amended  by  oral  testimony.  Gearing  v.  Carroll,  151  Pa.  St.  79,  24  Atl.  1045. 
The  removal  of  the  place  of  business  of  a  "limited  partnership"  from  the  county 
where  it  was  established,  and  where  the  certificate  required  by  the  statute  has 
been  duly  filed  in  the  county  clerk's  office,  to  another  county,  and  the  continuance 
of  business  there,  without  filing  in  the  clerk's  office  of  that  county  any  new  cer- 
tificate, renders  it  a  general  partnership,  and  the  special  partners  liable  as  gen- 
eral partners.  Van  Riper  v.  Poppenhausen,  43  N.  Y,  68.  The  certificate  of  the 
formation  of  a  limited  partnership  declared  "that  all  the  general  partners  inter- 
ested therein  are  A.  and  B.,  both  of  Brooklyn,  in  the  state  of  New  York,  and 
that  the  special  partner  interested  therein  is  C,  of  Jersey  City,  in  the  state  of 
New  Jersey."  Held,  that  this  was  a  compliance  with  the  statute  requiring  the 
certificate  to  contain  the  respective  places  of  residence  of  the  general  and  special 
partners,  and  that  no  more  distinct  averment  of  residence  was  required.  (2  Rev, 
St.  [4th  Ed.]  p.  174,  §  4,  subd.  3;  2  Rev.  St.  [9th  Ed,]  p.  1844.  §  4,  subd.  3). 
Lachaise  v.   Marks.  4  E.   I).  Smith   (N.   Y.)  610. 

*8  Comp.  Laws  1884,  §  1801.  «♦  Gen.  St.  1888,  §  3279. 

*6  Comp.  Laws  1884.  §  ISOl. 


§    192)  CERTIFICATE.  431 

Hampshire,**  Virginia,*'  Kentucky,**  Missouri,*"  and  Colorado  ''^ 
it  must  state  the  place  where  the  business  is  to  be  carried  on).  (3) 
The  names,  Christian  and  surname,  and  places  of  residence,  of  all 
the  general  and  special  partners  interested  therein,  distinguishing 
(in  all  except  Oregon,"**  Washington,"  Idaho,"  and  New  Mexico  ■**) 
which  are  general  and  special  (and  also  in  Connecticut ''"  and  Flor- 
ida "  designating  which  of  the  general  partners  are  authorized  to 
transact  business  and  sign  the  firm  name).  (4)  The  amount  of  cap- 
ital which  each  partner  has  contributed  to  the  common  stock 
(and  in  Florida  "  "the  nature  of  such  capital,  whether  in  cash,  mer- 
chandise, or  business  experience  and  skill,"  and  in  Missouri  ■**  the 
amount  he  has  agreed  to  contribute,  but  which  is  yet  unpaid).  (5) 
The  periods  at  which  the  partnership  is  to  commence  and  termi- 
nate. The  facts  are  almost  universally  required  to  be  stated 
in  the  certificate.  In  some  states  additional  facts  must  be  stated. 
Thus,  in  Missouri  "  and  New  Mexico  '"  the  amount  of  means  each 
special  partner  may  annually  withdraw  for  his  individual  use  from 
the  partnership  must  be  stated.  In  New  Mexico  "*  the  certificate 
must  also  state  the  administration  or  branches  in  which  each  one 
shall  act,  the  manner  in  which  they  shall  divide  profits  or  losses, 
an  agreement  that  the  partners  will  submit  under  a  conventional 
penalty  to  the  adjudication  of  arbitrators  without  appeal,  and  such 
other  conditions  as  may  be  desired.  This  contract  or  certificate  is 
required  in  all  partnerships,  general  or  limited,  in  New  Mexico."^ 
In  Illinois  "  the  certificate  may  provide  the  terms  upon  which  the 
partnership  may  be  dissolved,  and  that  the  death  of  any  shall  not 
work  a  dissolution.  In  Georgia  "*  the  certificate  may  be  signed 
by  power  of  attorney,  which  must  be  duly  recorded  with  it. 

*•  Pub.  St.  1891,  c.  122,  §  3.  B6  Gen.   St.    1888,   §  3279. 

*7  Code  1887,   §  2865.  6  6  McClel.  Dig.  1881,  c.  159,  §  2. 

*8  St,  1894,  c.  94,  §  3769.  •»7  McClel.  Dig.  1881,  c.  159,  §  2. 

4»  Rev.   St.   1889,   §   7197.  es  Rev.   St.   1889,   §   7197. 

60  Mills'  Ann.  St.  1891,  §  3372.  69  Rev.  St.  1889,  §  7197. 

61  2  Hill's  Ann.  Laws  1892,  §  3850.  eo  Comp.  Laws  1884,  §  1801. 
•  2  Gen,  St.  1891,  §  2919.  6i  Comp.  Laws  1884,  §  ISOL 
68  Rev.   St.   1887,   §   3272.  «2  Comp.  Laws  1884,  §  1801. 

•*  Comp.   Laws   1884,   §   1801.  «»  2  Starr  &  C.  Ann.  St.  1896,  o.  84.  §  4. 

•*  Code  1882,  §  1923. 


432  UMTTED    PARTNERSHIPS.  (Ch.    10 

193.  ACKNOWIiEDQMENT  AND  PROOF— In  most  states 
the  certificate  must  be  ackno"wledged  before  a  proper 
oflB.cer  by  the  persons  signing  it. 

In  most  states  the  several  persons  signing  the  certificate  must 
acknowledge  it  (or  their  signatures  may  be  proved  as  in  the  case  of 
a  deed)  before  the  same  persons  authorized  to  take  acknowledg- 
ment or  proof  of  deeds  of  land.®°  Some  statutes  authorize  the  ac- 
knowledgment to  be  before  any  justice  of  the  peace,"  or  a  notary 
public,®^  or  a  clerk  of  court;,®*  or  court  of  record,*'  or  any  chancel- 
lor or  judge  of  the  supreme,  circuit,  or  county  courts.'*     The  ac- 

«B  CALIFORNIA:  Civ.  Code  1886,  §  2480.  COLORADO:  Mills'  Ann.  St. 
1891,  §  3373.  CONNECTICUT:  Gen.  St.  1888,  §  3279.  DAKOTA:  Conip. 
Laws  1887,  §  4075.  FLOKIDA:  McClel.  Dig.  1881,  c.  159,  §  3.  IDAHO: 
Rev.  St.  1887,  §  3273.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  5. 
IOWA:  McClain's  Code  1888,  §  3334.  KANSAS:  Gen.  St.  1889,  par.  3981. 
KENTUCKY:  St.  1894,  c.  94,  §  3770.  MARYLAND:  Code  1SS8,  art.  73,  | 
4;  Laws  1884,  c.  65.  MASSACHUSETTS:  Pub.  St.  1882,  c.  75,  §  5.  MICH- 
IGAN: How.  Ann.  St.  1S82,  §  2345.  MINNESOTA:  Gen.  St  1894,  §  2334. 
MISSISSIPPI:  Code  1892,  §  2767.  MISSOURI:  Rev.  St,  1889,  §  7198. 
MONTANA:  Civ.  Code  1895,  §  3293.  NEBRASKA:  Comp.  St.  1893,  c.  65, 
§  5.  NEVADA:  Gen.  St.  1885,  §  4908.  NEW  JERSEY:  Gen.  St.  1895, 
"Partnership,"  §  5.  NEW  YORK:  Laws  1837,  c.  129.  NORTH  DAKOTA: 
Rev,  Code  1895,  §  4419.  OHIO:  Rev.  St.  1892,  §  3144.  OREGON:  2  Hill's 
Ann.  Laws  1892,  §  3850.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1S94,  "Limit- 
ed Partnership,"  §  5.  SOUTH  CAROLINA:  Rev.  St.  1893,  §  1411.  TEN- 
NESSEE: Mill  &  V.  Code  1884,  §  2402.  TEXAS:  Rev.  St.  1895,  art.  3587. 
UTAH:  Comp.  Laws  1888.  §  2477.  WASHINGTON:  Gen.  St.  1891,  §  2919. 
WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  §  1706.  WYOMING:  Rev.  St 
1887,  §  4072. 

e«  ARKANSAS:  Sand.  &  H.  Dig.  1894,  §  5451.  DELAWARE:  Rev.  Code 
1893,  c.  64,  §  3.  GEORGIA:  Code  1882,  §  1924.  INDIANA:  Rev.  St  1894, 
§  8112.  MAINE:  Rev.  St  1883,  c.  33,  §  3.  MARYLAND:  Code  1888,  art 
73,  §  4.  NEW  HAMPSHIRE:  Pub.  St  1891,  c.  122,  §  4.  RHODE  ISLAND: 
Gen.  Laws,  1896,  c.  157,  §  4.     VERMONT:      St  1S94,  §  4279. 

«7  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  6.  GEORGIA: 
Code  1882,  §  1924.  NEBRASKA:  Comp.  St  1893,  c.  65,  §  5.  RHODE 
ISLAND:     Gen.  Laws  1896,  c.  157,  §  4.     UTAH:     Comp.  Laws  1888,  §  2477. 

88  KENTUCKY:  St  1894,  c.  94,  §  3770.  NORTH  CAROLINA:  Code 
1883,  §  3091. 

89  NEW  MEXICO:     Comp.  Laws  1884,  §  1801. 

TO  NEW  YORK:     Rev.  St  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  5. 


§    194)  RECORD   OF   CERTIFICATE.  433 

knowledgment  is  generally  to  be  made  in  the  same  manner  as  in  the 
case  of  a  deed  conveying  lands.'' ^  In  Virginia  and  West  Virginia 
it  is  to  be  acknowledged  as  in  the  case  of  a  power  of  attorney^" 
In  Florida  it  must  be  proved  by  two  witnesses/' 

194.  RECORD — The  certificate  must  be  recorded. 

The  certificate  so  made  is  to  be  recorded  in  some  states  in  the 
land-record  office  of  the  county  or  town  wherein  is  situated  the 
chief  place  of  business  of  the  partnership.''*  In  some  states  it  is  to 
be  recorded  in  the  office  of  the  county  clerk  in  such  county.' '      In 

Ti  ARKANSAS:  Sand.  &  H.  Dig.  1894,  §  5451.  COLORADO:  Mills'  Ann. 
St.  1891,  §  3373.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  6. 
FLORIDA:  McClel.  Dig.  1881.  c.  159,  §  3.  ILLINOIS:  2  Starr  &  G.  Ann. 
St.  1896,  c.  84,  §  5.     KANSAS:     Gen.  St,  1889,  par.  3981.     KENTUCKY:     St. 

1894,  c.  94,  §  3770.  MARYLAND:  Code  1888,  axt.  73,  §  4;  Laws  1884,  c.  65. 
MICHIGAN:  How.  Ann.  St.  1882,  §  2345.  MINNESOTA:  Gen.  St.  1894,  § 
2334.  MISSISSIPPI:  Code  1892,  §  2767.  MISSOURI:  Rev.  St.  1889,  §  7198. 
NEBRASKA:     Cobbey's  Consol.  St.  1891,  §  3235.      NEW  JERSEY:     Gen.  St. 

1895,  "Partnership,"  §  5.  NEW  YORK:  Rev.  St.  (9th  Eu.)  pt.  2,  c.  4,  tit.  1,  §  5. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  6.  SOUTH 
CAROLINA:  Rev.  St.  1893,  §  1411.  TENNESSEE:  Mill.  &  V.  1884,  §  2402. 
TEXAS:      Rev.  St.  1895,  art.  3587.      UTAH:      Comp.  Laws  18S8,  §  2477. 

72  VIRGINIA:  Code  1873,  c.  142,  §  4.  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  4. 

7  3  McClel.  Dig.  1881,  c.  159,  §  3. 

7  4  CALIFORNIA:  Civ.  Code  1886,  §  2480.  DELAWARE:  Rev.  Code  1893, 
c.  64,  §3.  IDAHO:  Rev.  St.  1887,  §  3273.  INDIANA:  Rev.  St.  1894,  §  8112. 
MAINE:  Rev.  St.  1883,  c.  33,  §  3.  MINNESOTA:  Gen.  St.  1894,  §  2335. 
MISSOURI:  Rev,  St.  1889,  §  7198.  MONTANA:  Civ.  Code  1895,  §  3293. 
NEVADA:  Gen.  St.  1885,  §  4908.  NEW  HAMPSHIRE:  Pub.  St.  1891,  c.  122, 
f  4.  NORTH  CAROLINA:  Code  1883,  §  3092.  OHIO:  Rev.  St.  1892,  § 
3145.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  6. 
TENNESSEE:  Mill.  §  V.  Code  1884,  §§  2402,  2403.  UTAH:  Comp.  Laws  1888, 
§  2478.  WYOMING:  Rev.  St.  1887,  §  4072.  Cf.  Adam  v.  Musson,  37  111.  App. 
501.  Though  Rev.  St.  N.  Y.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  6,  in  relation  to  limited 
partnerships,  provides  that  tlie  certificate  required  by  law  to  be  made  by  those 
forming  such  partnership  shall  be  recorded  in  the  office  of  the  county  clerk,  the 
failure  of  the  clerk  to  record  it,  when  it  has  been  duly  filed  for  record,  does  not 
render  the  members  of  the  partnership  liable  as  general  partners.  (Ruger,  O.  J., 
and  Gray,  J.,  dissenting.)      Manhattan  Co.  v.  Laimbeer,  108  N.  Y.  578,  15  N.  E.  712. 

76  COLORADO:  Mills'  Ann.  St  1891,  §  3374.  GEORGIA:  Code  1882,  ( 
GEO.PART.— 28 


434  LIMITED    PARTNERSHIPS.  (Ch .    10 

Vermont,''"  Rhode  Island/^  and  Connecticut  ^»  it  should  be  recorded 
in  the  oflSce  of  the  town  clerk.  In  some  other  states  the  record 
should  be  made  in  the  oflSce  of  the  clerk  of  the  circuit  or  superior 
court  for  the  county.^®  In  Massachusetts  it  is  to  be  recorded  with 
the  secretary  of  state;  «<>  in  Alabama  with  the  judge  of  probate;"^ 
in  Mississippi  with  the  chancery  clerk;  *^  in  District  of  Columbia 
with  the  clerk  of  the  supreme  court/^  The  record  is  made  in  books 
kept  open  to  public  inspection.^*     K  the  partnership  shall   have 

L925.  ILLINOIS:  2  Starr  &  C.  Auu.  St  1S96,  c.  »i,  §  6.  KANSAS:  Gen. 
St.  1889,  par.  3982.  KENTUCKY:  St.  1894,  c.  94,  §  3770.  MICHIGAN: 
How.  Ann.  St  1882,  §  234G.  NEBRASKA:  Cobbey's  Consol.  St  1891,  §  323G. 
NEW  JERSEY:  Gen.  St  1895,  "Partnership,"  §  6.  NEW  YORK:  Rev.  St 
(9th  Ed.)  pt  2,  c.  4,  tit  1,  §  0.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3850. 
SOUTH  CAROLINA:  Rev.  St  1893,  §  1412.  TEXAS:  Rev.  St.  1895,  art. 
3588.  VIRGINIA:  Code  1873,  c.  142,  §  4.  WASHINGTON:  Code  1891,  §§ 
2919,  2920.  WEST  VIRGINIA:  Code  1891,  c  lUU,  §  4;  Laws  1883,  c.  5. 
WYOMING:      Rev.  St  1887,  §  4072. 

7  8  St  1894,  §  4279. 

T7  Gen.  I-aws  189U,  c.  157,  §  4. 

T8  Gen.  St  1888,  §  3279. 

T»  ARKANSAS:  Sand.  &  H.  Dig.  1894,  §  5453.  FLORIDA:  McClel.  Dig. 
1881,  c.  139,  §  4.  IOWA:  McClaiu's  Code  1888,  §  3335.  MARYLAND:  Code 
1888,  art  73,  §  4.     WISCONSIN:      Sanb.  &  B.  Ann.  St  1889,  §  170t>. 

8  0  Pub.  St.  1882,  c.  75,  §  5. 

81  Code  1880,  §  1710. 

82  Code  1892.  §  2707. 

8S  DISTRICT  OF  COLUMBIA:      Comp.  St  1894,  c.  43,  §  6. 

84  ALABAMA:  Code  1886,  §  1710.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  § 
5452.  COLORADO:  Mills'  Ann.  St.  1891,  §  3374.  DISTRICT  OF  COLUM- 
BIA: Comp.  St.  1894,  c.  43,  §  6.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  4. 
GEORGIA:  Code  1882,  §  1925.  IDAHO:  Rev.  St  1887,  §  3273.  ILLINOIS: 
Starr  &  C.  Ann.  St  1806,  c.  84.  §  6.  INDIANA:  Rev.  St.  1894,  §  8112.  IOWA: 
McClain's  Code  1888,  §  3335.  KANSAS:  Gen.  St  1889,  par.  3982.  MAINE: 
Rev.  St  1883,  c.  33,  §  3.  MARYLAND:  Code  1888,  art  73,  §  4.  MASSA- 
CHUSETTS: Pub.  St.  1882,  c.  75,  §  5.  MICHIGAN:  How.  Ann.  St  1882,  § 
2346.  MINNESOTA:  Gen.  St  1894,  §  2335.  MISSISSIPPI:  Code  1880,  § 
1008.  MONTANA:  Civ.  Code,  1895,  §  3293.  NEVADA:  Gen.  St.  1S85,  §  4908. 
NEW  HAMPSHIRE:  Pub.  St  1891,  c.  122,  §  4.  NEW  JERSEY:  Gen.  St. 
1895,  "Partnership,"  §  6.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt.  2,  c.  4,  tit  1,  § 
6.  OHIO:  Rev.  St  1892,  §  3145.  PENNSYLVANIA:  Pepper  &  L.  Dig. 
1894,  "Limited  Partnership,"  §  7.  SOUTH  CAROLINA:  Rev.  St.  1893,  §  1412. 
TENNESSEE:  Code  1884,  §  2402.  TEXAS:  Rev.  St  1895,  art  3588.  VER- 
MONT:     St  1894,  §  4279.      WYOMING:      Rev.  St  1887,  §  ^1072. 


§    195)  PUBLICATION    OF    CERTIFICATE.  435 

places  of  business  in  different  counties,  a  transcript  of  the  certificate 
and  of  the  acknowledgment  thereof,  duly  certified,  must  be  filed  and 
recorded  in  like  manner  in  every  such  county.*" 

195.  PUBLICATION— A  copy    of   the    certificate    must  be 
published  as  required  by  statute. 

It  is  almost  universally  required  that  a  copy  of  the  certificate  shall 
be  published  by  advertisement  in  a  newspaper.**     In  Maryland  *^ 

SB  ALABAMA:  Code  1886,  §  1710.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  § 
5453.  CALIFORNIA:  Ciy.  Code  1886,  §  2480.  COLORADO:  Mills'  Ann 
St.  1891,  §  2519.  CONNECTICUT:  Gen.  St.  1888,  §  3279.  DAKOTA:  Comp 
Laws  1887,  §  4075.  DELAWARE:  Rev.  Code  1874,  c.  64,  §  3.  FLORIDA 
McClel.  Dig.  1881,  c.  lo9,  §  4.  IDAHO:  Rev.  St.  1887,  §  3273.  ILLINOIS 
2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  6.  INDIANA:  Rev.  St.  1894,  §  8112.  IOWA 
McClain's  Code  1888,  §  3335.  KANSAS:  Gen.  St.  1889,  par.  3983.  KENTUCKY 
St.  18^,  c.  94,  §  3770.  MAINE:  Rev.  St.  1883,  c.  33,  §  3.  MARYLAND 
Code  1888.  art.  73,  §  4.  MICHIGAN:  How.  Ann.  St.  1882.  §  2347.  MINNE- 
SOTA: Gen.  St.  1894,  §  2335.  MISSISSIPPI:  Code  1892,  §  2767.  MIS- 
SOURI: Rev.  St-  1889,  §  7198.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  § 
3236.  NEW  JERSEY:  Gen.  St.  1895,  "Partneisbip,"  §  6.  NEW  YORK: 
Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  6.  NORTH  CAROLINA:  Code  1883,  § 
3092.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4419.  OHIO:  Rev.  St  1892,  § 
3145.  PENNSYLVANIA:  Pepper  &  L.  Dig.  18i>4,  "Limited  Partnership,"  §  7. 
RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  4.  SOUTH  CAROLINA:  Rev. 
St.  1893,  §  1412.  TENNESSEE:  Code  1884,  §  2403.  TEXAS:  Rev.  St.  1895, 
art.  3588.  UTAH:  Comp.  Laws  1888,  §  2478.  VERMONT:  St.  1894,  §  4279. 
VIRGINIA:  Code  1887,  §  2866.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  4; 
Laws  1883,  c.  5.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889,  §  1706.  WYO- 
MING:     Rev.  St  1887,  §  4072. 

8»  ALABAMA:  Code  1886,  §  1714.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  § 
5456.  CALIFORNIA:  Civ.  Code  1886,  §  2483.  COLORADO:  Mills'  Ann. 
St  1891,  §  3377.  CONNECTICUT:  Gen.  St  1888,  §  3280.  DAKOTA:  Comp. 
Laws  1887,  §  4078.  DELAWARE:  Rev.  Code  1874,  c.  64,  §  3.  DISTRICT 
OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  10.  FLORIDA:  McClel.  Dig.  1881, 
c.  159,  §  8.  GEORGIA:  Code  1882,  §  1928.  IDAHO:  Rev.  St.  1887.  §  3276. 
ILLINOIS:  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  9.  INDIANA:  Rev.  St.  1894, 
§  8113.  IOWA:  McClain's  Code  1888,  §  3338;  Laws  1882,  c.  8.  KANSAS: 
Gen.  St.  1889,  par.  3986.  KENTUCKY:  St.  1894,  c.  94,  §  3770.  MAINE: 
Rev.  St  1883,  c.  33,  §  5.  MARYLAND:  Code  1888,  art  73,  §  7.  xMASSA- 
CHUSETTS:  Pub.  St  1882,  c.  75,  §  6.  MICHIGAN:  How.  .Ann.  St.  1882. 
§   2350.      MINNESOTA:     Gen.   St   1894,   §  2338.      MISSFSSIPPI:     Code  1880, 


8T  Code  1888,  art.  73,  §  7. 


436  LIMITED    PARTNERSHIPS.  (Ch.    10 

and  South  Carolina,'*  where  no  newspaper  is  published  in  the  county 
where  the  principal  place  of  business  is  situated,  publication  maj 
be  by  posting  copies.  In  a  few  states  the  publication  is  required 
to  be  made  in  two  newspapers.^'  The  publication  must  generally 
be  made  immediately  after  filing  the  certificate  for  record.'"  In 
Georgia  the  publication  is  required  to  be  within  two  months  after 

§  1011.  MISSOURI:  Rev.  St.  1889,  §  7198.  NEBRASKA:  Cobbey's  Consol. 
St.  1891,  §  3239.  NEVADA:  Gen.  St.  1885,  §  4909.  NEW  HAMPSHIRE: 
Pub.  St.  1891,  c.  122,  §  4.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  9. 
NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  9.  NORTH  CAROLINA: 
Code  1883,  §  309G.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4422.  OHIO: 
Rev.  St  1892,  §  3146.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3851.  PENN- 
SYLVANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §§  9,  10.  RHODE 
ISLAND:  Gen.  Laws  1896,  c.  157,  §  5.  SOUTH  CAROLINA:  Rev.  St.  1893, 
§  1415.  TENNESSEE:  M.ll.  &  V.  Code  1884,  §  2407.  TEXAS:  Rev.  St. 
1895,  art.  3591.  UTAH:  Comp.  Laws  1888,  §  2481.  VERMONT:  St.  1894, 
§  4280.  VIRGINIA:  Code  1887,  §  2867.  WASHINGTON:  Gen.  St  1891,  § 
2920.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  4.  WISCONSIN:  Sanb.  & 
B.  Ann.  St.  1889,  §  1709.     WYOMING:    Rev.  St  1SS7,  §  4075. 

8  8  Rev.  St.  1893,  §  1415. 

8  9  ALABAMA:  Code  1886,  §  1714.  GEORGIA:  Code  1882,  §  1928.  IOWA: 
McClain's  Code  1888,  §  3338;  Laws  1882,  c.  8.  MARYLAND:  Code  1888,  art 
73,  §  7.  MICHIGAN:  How.  Ann.  St  1882,  §  2350.  NEBRASKA:  Cobbey's 
Consol.  St  1891,  §  3239.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1, 
§  9.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  10. 
RHODE  ISLA.ND:  Gen.  Laws,  1890,  c.  157,  §  5.  WISCONSIN:  Sanb.  &  B. 
Ann.  St.  1889,  §  1709. 

00  ALABAMA:  Code  1886,  §  1714.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5456.  COLORADO:  Mills'  Ann.  St  1891,  §  3377.  DELAWARE:  Rev. 
Code  1874,  c.  04,  §  2.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  e.  43,  §  10. 
FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  8.  ILLINOIS:  2  Starr  &  C.  Ann. 
St  189G,  c.  84,  §  9.  INDIANA:  Rev.  St  1894,  §  8113.  IOWA:  McClain's 
Code  1888,  §  3338;  Laws  1882,  c.  a  KANSAS:  Gen.  St  1889,  par.  3986. 
MARYLAND:  Code  1888,  art.  73,  §  7.  MASSACHUSETTS:  Pub.  St  1882, 
c.  75,  §  6.  MICHIGAN:  How.  Ann.  St.  1882,  §  2350.  MINNESOTA:  Gen. 
St  1894,  §  2338.  MISSISSIPPI:  Code  1880,  §  1011.  NEBRASKA:  Cobbey's 
Consol.  St.  1891,  §  3239.  NEVADA:  Gen.  St.  1885,  §  4909.  NEW  HAMP- 
SHIRE: Pub.  St  1891,  c.  122,  §  4.  NEW  JERSEY:  Gen.  St  1895,  "Part- 
nership," §  9.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit.  1,  §  9.  NORTH 
CAROLINA:  Code  1883,  §  3096.  OHIO:  Rev.  St  1892,  §  314G.  OREGON 
2  Hill's  Ann.  Laws  1892.  §  3851.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894, 
"Limited  Partnership,"  §  10.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  5. 
SOUTH  CAROLINA:     Rev.  St  1893,  §  1415.     TENNESSEE:     Mill.  &  V.  Code 


§    195)  PUBLICATION    OF    CERTIFICATE.  437 

record;"  in  Maine  within  twenty  days;®^  in  Idaho  within  one 
month.®^  In  some  states  the  paper  in  which  the  certificate  is  to 
be  published  is  designated  by  the  clerli  or  recorder,^*  but  in  the 
majority  of  states  the  newspapers  must  be  published  in  the  county, 
city,  or  district  where  the  principal  place  of  business  of  the  part- 
nership is  to  be.**^  If  no  paper  is  published  in  such  county,  some 
statutes  provide  that  the  publication  may  be  in  a  paper  published  in 

1884,  §  2407.  TEXAS:  ReT.  St,  1895,  art.  3591.  UTAH:  Comp.  Laws  1888, 
§  2481.  VERMONT:  St.  1894,  §  4280.  VIRGINIA:  Code  1887,  §  2867, 
WASHINGTON:  Gen.  St.  1891,  §  2920.  WISCONSIN:  Sanb.  &  B.  Ann.  St. 
18S9,  §  1709.  WYOMING:  Rev.  St.  1887,  §  4075.  When  the  certificate  of 
a  limited  partnership  is  recorded  October  1st,  and  publication  is  not  made  until 
October  16th,  there  is  still  compliance  with  2  Rev.  St.  N.  Y.  pt.  2,  c.  4,  tit.  1,  §  9, 
requiring  partners  to  publish  the  terms  of  the  partnership,  when  requested,  for  at 
least  six  weeks  "immediately"  after  the  recording  of  the  certificate.  Manhattan 
Co.  V.  rhillips,  109  N.  Y.  383,  17  N.  E,  129. 

»i  Code  1882.  §  1928. 

92  Rev.  St.  1883,  c.  33,  §  5. 

83  Rev.  St.  1887,  §  3276. 

94  ALABAMA:  Code  1886,  §  1704.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5456.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  10.  IOWA: 
McClain's  Code  1888,  §  3338;  Laws  1882,  c.  8.  MARYLAND:  Code  1888,  art. 
73,  §  7.  MICHIGAN:  How.  Ann.  St.  1882,  §  2350.  NEBRASKA:  Cobbey's 
Consol.  St.  1891,  §  3239.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Lim- 
ited Partnership,"  §  10.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2407. 
TEXAS:  Rev.  St.  1895,  art.  3591.  UTAH:  Comp.  Laws  1888,  §  2481.  WIS- 
CONSIN:    Sanb.  &  B.  Ann.  St.  1889,  §  1709. 

98  CALIFORNIA:  Civ.  Code  1886,  §  2483.  COLORADO:  Mills'  Ann.  St. 
1891,  §  3377.  CONNECTICUT:  Gen.  St.  1888,  §  3280.  DAKOTA:  Comp. 
Laws  1887,  §  4078.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  8.  GEORGIA: 
Code  1882,  §  1928.  IDAHO:  Rev.  St.  1887,  §  3276.  ILLINOIS:  2  Starr  & 
C.  Ann.  St.  1896,  e.  84,  §  9.  INDIANA:  Rev.  St.  1894,  §  8113.  IOWA:  Mc- 
Clain's Code  1888,  §  3338;  Laws  1882,  c.  8.  KANSAS:  Gen.  St.  1889,  par. 
3986.  KENTUCKY:  St.  1894,  c.  94,  §  3770.  MAINE:  Rev.  St.  1883,  c.  33, 
§  5.  MARYLAND:  Code  1888,  art.  73,  §  7.  MASSACHUSETTS:  Pub.  St. 
1882,  c  75,  §  6.  MICHIGAN:  How.  Ann.  St.  1882,  §  2350.  MINNESOTA: 
Gen.  St.  1894,  §  2338.  MISSISSIPPI:  Code  1880,  §  1011.  MISSOURI:  Rev. 
St.  1889,  §  7198.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  §  3239.  NEVADA: 
Gen.  St.  1885,  §  4909.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  9. 
NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4.  tit.  1,  §  9.  NORTH  CAROLINA: 
Code  1883,  §  3096.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4422.  OHIO: 
Rev.  St.  1892,  §  3146.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3851.  PENN- 
SYLVANIA:    Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  10.     SOUTH 


438  LIMITED    PARTNERSHIPS.  (Ch.    10 

some  adjoining  county,'®  or  in  the  same  judicial  district,®'  or  in  a 
paper  in  which  the  sheriff  advertises,"**  or  in  some  paper  published 
in  the  principal  city  or  capital  of  the  state,"  or  some  paper  desig- 
nated by  the  clerk.'°°  In  Rhode  Island'*''  and  Delaware '"^  the 
publication  may  be  made  in  any  paper  published  in  the  state.  In 
Oregon  '°^  and  Washington  '"*  the  words  "having  general  circula- 
tion in  the  county"  are  added.  In  some  states,  where  the  partner- 
ship has  places  of  business  in  several  counties,  the  certificate  must 
be  published  in  each  of  such  counties.'"''  Publication  should  be 
made  once  a  week  in  some  states  for  six  successive  weeks;"*®    in 

CAROLINA:  Rev.  St.  1893,  §  1415.  UTAH:  Comp.  Laws  1888.  §  2481. 
VERMONT:  St.  18".»4.  §  4280.  VIHr.INIA:  Code  1SS7,  §  2807.  WASH- 
INGTON: Gen.  St.  1891,  §  2920.  WEST  VIRGINIA:  Code  1S91,  c.  100.  §  4. 
WISCONSIN:      Sanb.   &    B.   Ann.    St.    1889,   §   1709.      WYOMING:      Rev.    St. 

1887,  §  4075. 

•  •CALIFORNIA:  Civ.  Code  1886,  8  2483.  COLORADO:  Mills'  Ann.  St. 
1891,  §  3377.  DAKOTA:  Comp.  Laws  1887.  §  4078.  FLORIDA:  McCld. 
Dig.  188L  c.  159,  §  8.  IDAHO:  Rer.  St.  1887.  §  3276.  ILLINOIS:  2  Starr 
&  C.  Ann.  St.  1896,  c.  84,  §  9.  INDIANA:  Rev.  St.  1894,  §  8113.  KEN 
TUCKY:  St.  1894,  c.  94.  §  3770.  MAINE:  Rev.  St.  1SS3.  c.  33,  §  5.  MIS- 
SISSIPPI: Code  1880.  §  1011.  MISSOURI:  Rev.  St.  1889.  §  7198.  NEVA- 
DA: Gen.  St.  1885,  §  4909.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership," 
8  9.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4422.  OHIO:  Rev.  St.  1892. 
§3146.      SOUTH  CAROLINA:      Rev.  St.  1893.  §  1415.      UTAH:      Comp.  Laws 

1888,  §  2481.  VERMONT:  St.  1894.  §  4280.  WYOMING:  Rev.  St.  1887, 
§  4075. 

»7  NEBRASKA:     Cobbey's  Consol.  St.  1891,  S  3239. 
•8  GEORGIA:     Code  1882.  §  1928. 

99  MASSACHUSE'rrS:  Pub.  St.  1882,  c.  75,  §  6.  MINNESOTA:  Geu.  St- 
1894.  §  2338.     MISSOURI:     Rev.  St.  1889,  §  7198. 

100  MARYLAND:     Code  1888,  art.  73,  §  7. 

101  Gen.  Laws  1896,   c.   157,  §  5. 

102  Kev.  Code  1874,  c.  64,  §  3. 

103  2  Uill's  Ann,  Laws  1892,  §  3851. 

104  Gen.   St.  1891,   §  2920. 

lOB  KENTUCKY:  St.  1894,  c.  94,  §  3770.  MARYLAND:  Code  1888.  art. 
73,  §  7.  MISSOURI:  Rev.  St.  1889,  §  7198.  OHIO:  Rev.  St.  1892,  §  3146. 
VIRGINIA:     Code  1887,  §  2867.     WEST  VIRGINIA:     Code  1891,  c.  100,  §  4. 

106  ALABAMA:  Code  1886.  §  1714.  ARKANSAS:  Sand.  &  H.  Dig.  1S94. 
g  5456.  CONNECTICUT:  Gen.  St.  1888,  §  3280.  DELAWARE:  Rev.  Code 
1874,  c.  64,  §  3.  FLORIDA:  McClel.  Dig.  1881,  c.  150,  §  8.  GEORGIA: 
Code  1882,  §  1928.     ILLINOIS:     2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  9.     IN- 


§    195)         •  PUBLICATION    OF    CERTIFICATE.  439 

others,  for  three  successive  weeks;  ^°''  in  others,  for  four  successive 
weeks;  ^°'»  in  Mississippi,  for  three  months.^"®  In  most  states  the 
statutes  provide  that  failure  to  make  the  required  publication  shall 
render  the  partnership  a  general  one."**     Upper  Canada  and  Loui- 

DIANA:     Rev.  St.  1894,  §  8113.     IOWA:     McCIain's  Code  18S8,  §  3338;    Laws 

1882,  c.  8.  MAINE:  Rev.  St.  1883.  c.  33.  §  5.  MARYLAND:  Code  1888, 
art.  73,  §  7.  MASSACHUSETTS:  Pub.  St.  1882,  c.  75,  §  6.  MICHIGAN: 
How.  Ann.  St.  1882,  §  2350.  MINNESOTA:  Gen.  St.  1894,  §  2338.  NE- 
BRASKA: Cobbey's  Consol.  St.  1891,  §  3239.  NEW  JERSEY:  Gen.  St. 
1895,  "Partnership,"  §  9.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit.  1, 
§  9.  NORTH  CAROLINA:  Code  1SS3,  §  3096.  OHIO:  Rev.  St.  1892,  § 
3146.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1804,  "Limited  Partnership,"  § 
10.  RHODE  ISLAND:  Gen.  Laws  1896.  c.  157,  §  5.  SOUTH  CAROLINA: 
Rev.  St.  1893,  §  1415.  TENNESSEE:  Mill.  &  V.  Code  1884,  S  2407.  TEXAS: 
Rev.  St.  1895,  art.  8591.  VERMONT:  St.  1894,  §  4280.  VIRGINIA:  Code 
1873,0.142,5  4.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  4.  WISCONSIN: 
Sanb.  &  B.  Ann.  St.  1889,  f  1709. 

107  NEV.VDA:  Gen.  St.  1885,  §  4909.  NEW  HAMPSHIRE:  Gen.  Laws 
1878,  c.  lis,  §  4. 

108  CALIFORNIA:  Civ.  Code  1886,  §  2483.  COLORADO:  Mills'  Ann.  St. 
1891,  §  3377.  DAKOTA:  Comp.  Laws  1887,  §  4078.  DISTRICT  OF  CO- 
LUMBIA: Conip.  St.  1894,  c.  43,  §  10.  IDAHO:  Rev.  St.  1887,  §  3276. 
KANSAS:  Gen.  St.  1889,  par.  3986.  KENTUCKY:  St.  1894,  c.  94,  §  3770. 
MISSOURI:  Rev.  St.  1889,  §  7198.  NORTH  DAKOTA:  Rev.  Code  1895,  § 
4422.  OREGON:  2  Hill's  Ann.  Laws  1891,  §  3377.  UTAH:  Comp.  Laws 
1888,  §  2481.  WASHINGTON:  Gen.  St.  1S91,  §  2920.  WYOMING:  Rev. 
St.  1887,  §  4075. 

109  Code  1880,  S  1011. 

110  ALABAMA:  Code  1886,  §  1714.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
{  5456.  CALIFORNIA:  Civ.  Code  1886,  §  2483.  COLORADO:  Mills'  Ann. 
St  1891,  §  3377.  DAKOTA:  Comp.  Laws  1887,  §  4078.  DELAWARE: 
Rev.  Code  1874,  c.  64,  §  3.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c. 
43,  §  11.  GEORGIA:  Code  1882,  §  1928.  IDAHO:  Rev.  St.  1887,  §  3276. 
ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  9.  INDIANA:  Rev.  St. 
1894,  §  8113.  IOWA:  McCIain's  Code  1888,  §  SS.-'^S;  Laws  1882,  c.  8.  KAN- 
SAS: Gen.  St.  1889,  par.  3986.  KENTUCKY:  St.  1894,  c.  94.  §  3770. 
MAINE:  Rev.  St.  1883,  c.  33,  §  5.  MARYLAND:  Code  1888,  art.  73,  §  7. 
MICHIGAN:  How.  Ann.  St.  1882,  §  2350.  MINNESOTA:  Gen.  St.  1894, 
§  2338.  MISSISSIPPI:  Code  1880,  §  1011.  MISSOURI:  Rev.  St.  1889,  § 
7198.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  §  3239.  NEVADA:  Gen. 
St.  1885,  §  4909.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  9.  NEW 
YORK:     Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit  1,  §  9.     NORTH  CAROLINA:     Code 

1883,  §  3096.     NORTH   DAKOTA;     Rev.   Code  1895,  §  4422.     OHIO:     Rev. 


440  LIMITED    PARTNERSHIPS.  (Ch.    10 

siana  require  no  publication.*^*  Connecticut  does  not  specify  the 
consequence  of  failure  to  make  publication.**' 

Proof  of  Pvhlication. 

In  some  states  no  provision  is  made  for  proving  due  publication; 
but  in  most  states  the  statute  provides  that  the  afiQdavit  of  the 
fact  of  publication  made  by  the  publisher  or  editor  of  the  new^spaper 
in  which  publication  is  made  may  or  shall  be  filed  with  the  clerk  or 
recording  ofiicer,  and,  when  filed,  shall  be  presumptive  or  prima 
facie  evidence   of  the   facts  therein   contained.**"      In   Maryland, 

St.  1892,  §  3146.  OREGON:  2  Hill's  Ann,  Laws  1892,  §  3851.  PENNSYL- 
VANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  10.  RHODE 
ISLAND:     Gen.    Laws   1896,   c.    157,   §   5.     SOUTH    CAROLINA:     Rev.    St. 

1893,  §  1415.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2407.  TEXAS:  Rev. 
St.  1895,  art,  3591.     UTAH:     Comp.   Laws  1888,  §  2481.     VERMONT:     St. 

1894,  §  4280.  VIRGINIA:  Code  1887,  §  2867.  WASHINGTON:  Gen.  St. 
1891,  §  2920.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889,  §  1709.  WYOMING: 
Rev.  St.  1887,  §  4075. 

111  See  Bates,  Lim.  Partn.  40. 

112  Gen.  St.  1888,  §  3280. 

118  ALABAMA:  Code  1886,  §  1715.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5457.  CALIFORNIA:  Civ.  Code  1886,  §  2484.  DAKOTA:  Comp.  Laws 
1887,  §  4079.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  12. 
GEORGIA:  Code  1882,  §  1929.  IDAHO:  Rev.  St.  1887,  §  3277.  ILLINOIS: 
2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  10.  IOWA:  McClain's  Code  1888,  §  3339. 
KANSAS:  Gen.  St.  1889,  par.  3987.  MARYLAND:  Code  1888,  art.  73,  §  8. 
MICHIGAN:  How.  Ann.  St.  1882,  §  2351.  MINNESOTA:  Gen.  St.  1894, 
§  2339.  MISSISSIPPI:  Code  1880,  §  1012.  NEBRASKA:  Cobbey's  Consol. 
St.  1891,  §  3240.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  10.  NEW 
YORK:  Rev.  St.  {9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  10.  NORTH  CAROLINA:  Code 
1883,  §  3097.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4423.  PENNSYL- 
VANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  12.  SOUTH  CAR- 
OLINA: Rev..  St.  1893,  §  1416.  TENNESSEE:  Mill.  &  V.  Code  1884,  § 
2408.  TEXAS:  Rev.  St.  1895,  art.  3592.  UTAH:  Comp.  Laws  1888,  § 
2482.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889,  §  1710.  WYOMING:  Rev. 
St.  1887,  §  4076.  Where  a  certificate  of  the  formation  of  a  Hmited  partnership 
is  made,  certified,  and  recorded,  and  publication  is  made,  a  statute  which  pro- 
vides that,  unless  the  partners  shall  publish  "the  terms"  of  the  partnership 
in  a  newspaper,  it  shall  be  deemed  a  general  partnership,  the  creditors  of  the 
partnership  so  formed,  who  have  dealt  with  it,  and  recognized  it  as  a  limited 
partnership,  are  estopped  to  claim  that  it  is  general  because  the  publication  failed 
to  state  its  terms.     Tracy  v.  Tuffly,  134  U.  S.  206,  10  Sup.  Ct.  527. 


§    196)  AFFIDAVIT.  441 

where  the  publication  is  by  posting  notices,  it  may  be  proved  by  the 
affidavit  of  any  disinterested  person.*^* 

SAME— AFFIDAVIT. 

196.  At  the  time  of  filing  the  original  certificate,  there 
must  also,  in  most  states,  be  filed  an  affidavit  of  one 
or  more  of  the  general  partners,  stating  that  the 
sums  specified  in  the  certificate  to  have  been  paid 
in  by  the  special  partners  have  been  actually  and 
in  good  faith  paid  in  cash. 

In  several  states  the  affidavit  must  be  made  by  all  the  general 
partners,^  ^"^  and,  in  states  where  the  contribution  of  the  special 
partner  may  be  either  cash  or  its  equivalent,  the  affidavit  must  con- 
form to  the  facts.^^" 

11*  Code  1888,  art.  73,  §  8. 

lis  CONNECTICUT:  Gen.  St.  1888,  §  3279.  IDAHO:  Rev.  St.  1887,  § 
8274.  TEXAS:  Rev.  St.  1895,  art.  3589.  WYOMING:  Rev.  St.  1887,  § 
4073,     Cf.  Rawitzer  v.  Wyatt,  42  Fed.  287. 

118  ALABAMA:  Code  1886,  §  1711.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5454.  CALIFORNIA:  Civ.  Code  1886,  §  2481.  COLORADO:  Mills'  Ann. 
St.  1891,  §  3375.  CONNECTICUT:  Gen.  St.  1888,  §  3279.  DAKOTA:  Comp. 
Laws  1887,  §  4076.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  7. 
FLORIDA:  McCIel.  Dig.  1881,  c.  159,  §  5.  GEORGIA:  Code  1882,  §  1926. 
IDAHO:  Rev.  St.  1887,  §  3274.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896, 
c.  84,  §  7.  IOWA:  McClain's  Code  1888,  §  3336.  KANSAS:  Gen.  St.  1S89. 
par.  3984.  KENTUCKY:  St.  1894,  c.  94,  §  3769.  MARYLAND:  Code  1888 
art.  73,  §  5.  MICHIGAN:  How.  Ann.  St.  1882,  §  2848.  MINNESOTA: 
Gen.  St.  1894,  §  2836.  MISSISSIPPI:  Code  1892,  §  2768.  MISSOURI: 
Rev.  St.  1889,  §  7197.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  §  3237.  NEW 
HAMPSHIRE:  Gen.  Laws  1878,  c.  118,  §  5.  NEW  JERSEY:  Gen.  St. 
1895,  "Partnership,"  §  7.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1, 
§  7.  NORTH  CAROLINA:  Code  1883,  §  3093.  NORTH  DAKOTA:  Rev. 
Code  1895,  §  4420.  PENNSYLVANIA:  Pepper  §  L.  Dig.  1894,  "Limited 
Partnership,"  §  8.  SOUTH  CAROLINA:  Rev.  St.  1893,  §  1413.  TENNES- 
SEE: Mill.  &  V.  Code  1884,  §  2404.  TEXAS:  Rev.  St.  1895,  art.  3589. 
UTAH:  Comp.  Laws  1888,  §  2479.  VIRGINIA:  Code  1887,  §  2865.  WEST 
VIRGINIA:  Code  1891,  c.  100,  §  3.  WISCONSIN:  Sanb.  &  B.  Ann.  St. 
1889,  §  1707.  WYOMING:  Rev.  St.  1887,  §  4073.  For  an  affidavit  held  suffi- 
cient, see  Crouch  v.  Bank,  156  111.  342,  40  N.  E.  974.  Where  a  person,  under 
a  private  agreement  with  a  special  partner  in  a  limited  copartnership,  furnishes 


442  LIMITED    PARTNERSHIPS.  (Ch.    lO 


SAME— CONTRIBUTIONS  OF  GENEHAL  AND  SPECIAL 

PARTNERS. 

197.  The  contribution  of  the  special  partner  must  be  actu- 
ally paid  in  before  the  certificate  is  filed,  and  in 
most  states  must  consist  of  actual  cash,  though  in 
a  few  states  it  may  consist  of  property,  or  of  both. 
A  general  partner  need  make  no  contribution  to  the 
firm  capital. 

The  general  partner  is  not  required  to  make  any  contribution  to 
the  capital  of  the  firm.^^^  But  the  rule  requiring  the  contribution 
of  the  special  partner  to  be  actually  paid  in  is  very  strictly  en- 
forced. Such  payment  must  be  unconditional,  and  without  the 
reservation  of  any  control  by  the  special  partner  as  to  its  use.^^' 
"The  payment  must  be  made  to  and  in  the  hands  of  the  general 
partners  before  the  certificate  is  filed,  in  actual  cash.  Neither  check 
nor  promise  nor  subsequent  payment  will  suQice,  for  the  certificate 
and  affidavit  are  required  to  recite  what  has  been  done,  and  not 

a  certain  portion  of  the  capital,  which  the  special  partner  puts  into  the  business 
of  the  firm  in  his  own  name,  and  is  to  have  a  certain  portion  of  the  income  or 
profits  which  the  special  partner  derives  from  the  business,  with  a  privilege  of 
examining  from  time  to  time  into  the  business  matters  of  the  firm,  he  and  the 
special  partner  become  thereby  general  partners.  Buckley  v.  Lord,  24  How. 
Prac.  (N.  Y.)  455. 

iiT  Ilolliday  v.  Paper  Co.,  3  Colo.  342. 

118  Kichardson  v.  Hogg,  38  Pa.  St.  153;  Hill  v.  Stetler,  127  Pa.  St.  145,  13 
.\tl.  30G,  and  17  Atl.  887;  Metropolitan  Nat.  Bank  v.  Sirret,  97  N.  Y.  320.  It 
is  unlawful  for  the  general  partners  in  a  limited  partnership  organized  under 
the  act  of  March  21,  1836  (P.  L.  143),  to  assume,  without  any  consideration,  the 
debt  created  by  the  special  partner  in  procuring  the  money  which  he  pays  into 
the  firm  as  his  special  contribution.  Coffin's  Appeal,  106  Pa.  St.  280.  When 
the  special  partner,  under  a  limited  partnership,  does  not  pay  in  the  amount  of 
his  capital  specified  in  the  certificate,  and  the  firm,  having  become  insolvent, 
assigns  the  property  thereof  for  the  benefit  of  creditors,  he  may,  upon  a  complaint 
in  equity,  filed  by  the  trustee,  be  compelled  to  pay  in  the  deficiency  of  his  capital, 
to  be  used  in  the  payment  of  the  partnership  debts.  Robinson  v.  Mcintosh,  3 
B.  D.  Smith  (N.  Y.)  221.  It  does  not  depend  on  the  means  used  by  the  special 
partner  to  obtain  the  money,  so  long  as  the  ownership  of  the  money  paid  in  Li 
In  the  special  partner.      Lawrence  v.  Merrifield.  42  N.  Y.  Super.  Ct    36. 


§    197)        CONTRIBUTIONS    OF    GENERAL    AND    SPECIAL    PARTNERS.  443 

what  is  executory."  ^^^  Where  the  statute  requires  cash,  payuaent 
in  proijerty  or  bonds  is  not  a  compliance,^ ^**  Good  faith  and  an 
honest  intention  to  comply  with  the  statute  will  not  protect  the 

119  Bates,  Lim,  Partn.  §  47,  citing  Durant  v.  Abendroth,  69  N.  Y.  148;  Maginn 
V.  Linvrence,  45  N.  Y.  Super.  Ct.  235;  Hogg  t.  Orgill,  34  Pa.  St.  344;  Seibert 
v.  Bakewell,  S7  Pa.  St.  506;  De  Lizardi  t.  Gossett,  1  L:i.  Ann.  138.  Cf.  Brown 
V.  Davis,  6  Duer  (N.  Y.)  541);  Tasker  v.  Brown,  8  Pa.  Co.  Ct.  R.  390;  Haslet 
V.  Kent,  160  Pa.  St.  85,  28  Atl.  501;  Hall  t.  Glessner,  100  Mo.  155,  13  S.  W. 
349.  In  Durant  v.  Abendroth,  supra,  the  special  partner's  contribution  was  paid 
by  a  postdated  check,  and,  although  this  was  paid,  he  was  held  liable  as  a  gen- 
eral partner,  on  the  ground  that  the  aflidavit  averring  payment  in  cash  was  un- 
true. And  see,  Griggs  v.  Day  (Super.  N.  Y.)  12  N.  Y.  Supp.  958.  Under  the 
New  York  statute  relating  to  limited  partnerships,  the  payment  by  a  special 
partner  of  a  portion  of  the  capital  contributed  by  him,  in  the  checks  of  third 
persons  (it  being  conceded  that  they  represented  cash,  and  that  the  amount 
actually  went  into  the  firm  business),  is  not  such  a  violation  of  the  provision  re- 
quiring an  actual  cash  payment  as  will  render  him  liable  as  a  general  partner. 
Hogg  v.  Orgill,  34  Pa.  St.  344.  So  held  if  payment  by  check  on  a  solvent  bank. 
Metropolitan  Nat.  Bank  v.  Palmer,  56  Hun,  641,  9  N.  Y.  Supp.  230;  White  t. 
Eiseman,  134  N.  Y.  101,  31  N.  E.  276.  A  check  given  by  a  special  partner,  as 
his  capital  in  the  firm,  which  is  received  by  a  bank,  and  without  verification 
placed  as  cash  to  the  credit  of  the  firm,  and  which,  on  presentation,  is  paid  by 
the  bank  on  which  it  is  drawn,  is  a  sufficient  compliance  with  a  statute,  requir- 
ing the  capital  of  a  special  partner  to  be  paid  in  cash.  Kothchild  v.  Hoge,  43 
Fed.  97.  A  certificate  is  not  insutlicient  because  made  before  the  special  capital 
is  paid  in,  if  it  is  not  filed  until  afterwards.  Fifth  Ave.  Bank  v.  Colgate,  54 
N.  Y.  Super.  Ct.  188.  In  Louisiana  the  contribution  of  the  special  partner  need 
not  be  paid  in  at  the  start.     De  Lizardi  v.  Gossett,  1  La.  Ann.  138. 

120  Haggerty  v.  Foster,  103  Mass.  17;  Pierce  v.  Bryant,  5  Allen  (Mass.)  91; 
Durant  v.  Abendroth,  69  N.  Y.  148;  Kohler  v.  Lindenm  Eyr.  129  N.  Y.  498,  29 
N.  E.  957;  Haviland  v.  Chace,  39  Barb.  (N.  Y.)  283;  Van  Ingen  v.  Whitman, 
62  N.  Y.  513;  Hill  v.  Stetler  (Pa.  Sup.)  13  Atl.  306;  Richardson  v.  Hogg,  38 
Pa.  St.  153;  Bement  v.  Machine  Co.,  12  Phila.  494;  Liueweaver  v.  Slagle,  64 
Md.  465,  2  Atl.  (i93;  In  re  Thayer,  7  Am.  Law  Rev.  177,  Fed.  Cas.  No.  13,867; 
Patterson  v.  Holland,  7  Grant,  Ch.  (U.  C.)  1;  Watts  t.  Taft,  16  U.  C.  Q.  B.  256. 
Where  a  limited  partnership  is  attempted  to  be  formed,  but  the  contribution  of  the 
special  partner  is  made  in  goods,  and  not  in  cash,  as  required  by  the  statute,  the 
partnership  must  be  treated  as  a  general  one  so  far  as  the  liability  of  the  partoera 
to  creditors  is  concerned.  In  re  Allen,  41  Minn.  430,  43  N,  W.  382.  A  contribu- 
tion of  "a  specific  amount  of  capital  in  cash,  or  other  property  at  cash  value,"  is 
not  made  by  postijouing  the  payment  of  the  indebtedness  to  the  special  partners 
due  from  a  preceding  insolvent  firm,  until  the  new  firm  shall  have  paid  the  other 
creditors  of  the  old  one.    Manhattan  Brass  Co.  v,  Allin,  35  111.  App.  336.     Where, 


444  LIMITED    PARTNERSHIPS.  (Ch.    10 

special  partner.^"  ^^^  need  a  creditor  prove  that  he  has  been  in- 
jured bj  the  failure  to  comply  with  the  statute.  The  statute  must 
be  actually  complied  with.^"  rpj^^  failure  of  one  named  as  a  spe- 
cial partner  to  pay  in  his  contribution,  as  required,  will  render  oth- 
ers, who  were  also  to  be  special  partners,  liable  as  general  part- 
ners, although  these  latter  persons  have  on  their  own  part  fully 
complied  with  the  statute.""  Where  property  constitutes  a  part 
of  the  contribution,  it  must  be  appraised."*  and  the  certificate 
must  state  the  precise  amount  of  cash  and  of  property  contrib- 
uted."" 

on  termination  of  a  limited  partnership,  another  limited  partnership,  composed  of 
the  same  persons,  is  attempted  to  be  created,  and  it  is  agreed  that  the  contribution 
made  by  the  special  partner  to  the  former  firm,  and  the  amount  of  the  indebted- 
ness of  such  firm  to  him,  should  be  accepted  as  his  contribution  to  the  new  firm, 
there  is  not  a  cash  payment  by  the  special  partner.  First  Nat.  Bank  of  Jersey 
City  V.  Huber,  75  Hun,  80,  26  N.  Y.  Supp.  9G1.  Under  Act  Pa.  May  1.  1876  (P. 
L.  89),  which  allows  contributions  to  the  capital  of  a  limited  partnersliip  to  be 
made  "in  real  or  personal  estate,  mines,  or  other  property,  at  a  Taluation  to  be  ap- 
proved by  all  the  members,"  such  contribution  may  be  made  by  the  transfer  of 
patent  rights.     Rehfusa  v.  Moore,  134  Pa.  St.  462,  19  Atl.  756. 

121  Smith  V.  Argall,  6  Hill  (N.  Y.)  479;  Durant  v.  Abendroth,  69  N.  Y.  148; 
Argall  T.  Smith,  3  Denio  (N.  Y.)  435;  Pierce  ▼.  Bryant,  5  Allen  (Mass.)  91;  Hag- 
gerty  v.  Foster,  103  Mass.  17. 

i2i  Durant  v.  Abendroth,  69  N.  Y.  148;  Pierce  v.  Bryant,  5  Allen  (Mass.)  91; 
Holliday  v.  Paper  Co.,  3  Colo.  342;  In  re  Thayer,  7  Am.  Law  llev.  127.  Fed. 
Cas.  No.  13,867. 

123  Whittemore  v.  Macdonell,  6  U.  C.  C.  P.  547. 

124  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  6.  Vandike  t.  Rosskam,  67  Pa.  St. 
330.  See  Siegel  v.  Wood,  3  Pa.  Dist.  R.  463;  Bhmienthal  v.  Whitaker,  170  Pa. 
St.  309,  33  Atl.  103. 

128  Blumenthal  v.  Whitaker,  170  Pa.  St.  309,  33  Atl.  103;  Cock  y.  Bailey,  146 
Pa.  St.  328,  23  Atl.  370;  Lilley  v.  Bailey,  146  Pa.  St.  342,  23  Atl.  372;  Gearing 
V.  Carroll,  151  Pa.  St.  79,  24  Atl.  1045;  Vanhorn  v.  Corcoran,  127  Pa.  St.  255, 
18  Atl.  16;  Maloney  v.  Bruce,  94  Pa.  St.  249;  Vandike  v.  Rosskam,  67  Pa.  St. 
330;  In  re  Merrill,  12  Blatchf.  221,  Fed.  Cas.  No.  9,467;  Holliday  v.  Paper  Co., 
3  Colo.  342.  Cf.  Haslet  v.  Kent,  160  Pa.  St.  85,  28  Atl.  501.  Where  the  statute 
does  not  require  that  the  capital  should  be  paid  in  cash,  and  it  is  paid  in  property, 
it  should  be  so  stated,  and  its  cash  value  given.  Holliday  v.  Paper  Co.,  3  Colo. 
342.  In  the  absence  of  fraud,  an  excessive  valuation  put  upon  patent  rights  con- 
tributed to  the  capital  of  a  limited  partnership  by  the  members  does  not  vitiate  th» 
partnership.    Rehfuss  v.  Moore,  134  Pa.  St.  462,  19  Atl.  756. 


§    198)  FIRM    NAME.  446 

SAME— FIRM  NAME. 

198.  In  most  states  the  partnership  business  must  be  trans- 
acted in  a  firm  name  in  w^hich  the  names  of  the 
special  partners  do  not  appear,  and  without  the  ad- 
dition of  the  word  "Company"  or  any  other  general 
term. 

In  ordinary  partnerships,  as  has  been  seen,  the  use  of  a  firm  name 
is  not  necessary,""  but  in  Umited  partnerships  it  is  necessary.  It 
is  one  of  the  tilings  that  must  be  stated  in  the  certificate.  More- 
over, many  of  the  statutes  specifically  require  the  business  to  be 
transacted  under  a  firm  name,  and  provide  that  any  alteration  shall 
forfeit  the  protection  of  the  statute.  The  statutes  utilize  the  firm 
name  to  force  notice  of  the  limited  liability  upon  persons  dealing 
with  the  firm,  and  to  wani  persons  giving  it  credit  that  at  least 
part  of  its  means  are  derived  from  persons  not  liable  beyond  the 
fund."^  The  following  are  the  statutory  provisions  on  the  subject: 
In  most  states  the  names  of  the  general  partners  only  may  be  in- 
serted in  the  firm  name,"'  and  without  the  addition  of  the  word 

126  Ante,  p.  105. 

12T  Penrose  v.  Martyr,  El.,  Bl.  &  El.  499,  503. 

128  ALABAMA:  Code  1886,  §  1718.  ARKANSAS:  Sand.  &  H.  Dig.  1894. 
§  5460.  COLORADO:  Mills'  Ann.  St.  1891,  §  3378.  CONNECTICUT:  Gen. 
St.  188S,  §  3278.  DAKOTA:  Comp.  Laws  1887,  §  4081.  DELAWARE:  Rev. 
Code  1S74,  c.  64,  §  4.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43.  § 
17.  FLORIDA:  McClol.  Dig.  1883,  c.  159,  §  9.  GEORGIA:  Code  1882,  § 
1932.  IDAHO:  Rev.  St,  1887,  §  3294.  ILLINOIS:  2  Starr  &  C.  Ann.  St. 
1896,  c.  84,  §  16.  INDIANA:  Rev.  St.  1894,  §  8115.  IOWA:  McClain's  Code 
1888,  §  3342.  KANSAS:  Gen.  St.  1889,  par.  3990.  KENTUCKY:  St.  1894, 
c.  94,  §  3773.  MAINE:  Rev.  St.  1883,  c.  33,  §  6.  MARYLAND:  Code  1888, 
art.  73,  §  11.  MASSACHUSETTS:  Pub.  St.  1882,  c.  75,  §  3.  MICHIGAN: 
How.  Ann.  St.  1882.  §  2354.  MINNESOTA:  Gen.  St.  1894,  §  2342.  MISSIS- 
SIPPI: Code  1892,  §  2770.  MISSOURI:  Rev.  St.  1889,  §  7201.  MONTANA: 
Civ.  Code  1895,  §  3343.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  §  3243.  NE- 
VADA: Gen.  St.  1885,  §  4911.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership," 
§13.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit  1,  §  13.  NORTH  CARO- 
LINA: Code  1883,  §  3100.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4425. 
OHIO:  Rev.  St.  1892,  §  3150.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3853. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  17. 
RHODE  ISLAND:    Gen.  Laws  1896,  c.  157,  §  8.    SOUTH  CAROLINA:    Rev 


446  LIMITKD    PARTNKRsHIPS.  (Ch.    10 

"Company"  or  any  other  general  term.^''  In  Massachusetts  *''*  and 
Vermont,^  ^^  if  there  are  more  than  three  general  partners,  all  their 
names  need  not  be  inserted.  So,  in  several  other  states,  if  there 
are  two  or  more  general  partners,  the  names  of  one  or  more  only 
need  be  inserted,^'*  and  in  some  states  the  words  "and  Company" 
may   be   added.^^^      In    Massachusetts^^*    and    Pennsylvania,^^''   if 

St.  1893,  §  1419.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2411.  TEXAS: 
Rev.  St  1895,  art.  3595.  UTAH:  Comp.  Laws  1888.  §  2485.  VERMONT:  SL 
1894,  §  4282.  VIRGINIA:  Code  1887.  §  2S71.  WASHINGTON:  Gen.  St. 
1891,  §  2922.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  7.  WISCONSIN: 
Sanb.  &  B.  Ann.  St.  1889,  §  1713.    WYOMING:    Rev.  St.  1887,  §  4093. 

12»  ALABAMA:  Code  1876.  §  2076.  ARKANSAS:  Sand.  &  H.  Dig.  18W,  | 
5460.  DAKOTA:  Comp.  Laws  1887,  S  4081.  FLORIDA:  McClel.  Dig.  1881, 
c.  159,  §  9.  GEORGIA:  Code  1882,  §  1932.  IOWA:  McClain's  Code  1888,  § 
3342.  KANSAS:  Gen.  St.  1889.  par.  3990.  KENTUCKY:  St  1894,  c.  94,  { 
3773.  MAINE:  Rev.  St.  188-3.  c.  33,  §  6.  MASSACHUSETTS:  Pub.  St 
1882,  c.  75,  §  3.  MISSISSIPPI:  Code  1880.  §  1013.  MISSOURI:  Rev.  St 
1889,  §  7201.  NEW  .lEKSEY:  Gen.  St  1895,  "Partnership,"  §  13.  NORTH 
CAROLINA:  Code  1883,  §  3100.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4425. 
(OREGON:  2  Hill's  Ann.  Laws  1892,  §  3853.  PENNSYLVANIA:  Pepper  & 
L.    Dig.    1894,    "Limited    Partnership,"   §    17.     SOUTH    CAROLINA:    Rev.    St 

1893,  i  1419.  TENNESSEE:  Mill.  &  V.  Code  1S.S4,  §  2411.  TEXAS:  Rev. 
St.  1895,  art.  3595.  VERMONT:  St.  1894,  §  4282.  VIRGINIA:  Code  1887. 
§  287L  WASHINGTON:  Gen.  St  1891.  §  2922.  WEST  VIRGINIA:  Code 
1891,  c.  100,  i  7.  Hamixlen  Bank  v.  Morgan.  2  Haz.  Reg.  U.  S.  57,  Fed.  Gas. 
No.  6.008. 

130  Pub,  St  1882,  c.  75,  §  3. 

181  St  1894,  §  4282. 

isa  CONNECTICUT:  Gen.  St  1888.  §  3278.  MARYLAND:  Code  1888.  art. 
73,  §  11.  MINNESOTA:  Gen.  St  1894,  §  2342.  NEW  YORK:  Rev.  St  (9th 
Ed.)  pt  2,  c.  4,  tit.  1,  §  13.  OHIO:  Rev.  St  1892.  §  3150.  PENNSYLVANIA: 
Pepper  &  L,  Dig.  1894.  "Limited  Partnership."  §  18.  WISCONSIN:  Sanb.  &  B. 
Ann.  St.  1889,  §  1713. 

133  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  17.  MARYLAND: 
Code  1SS8,  art  73,  §  IL  MICHIGAN:  How.  Ann.  St  1882,  §  2354.  MINNE- 
SOTA: Gen.  St  1894,  §  2342.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c  4,  tit. 
1,  §  13.    OHIO:    Rev.  St  1892,  §  3150.    PENNSYLVANIA:    Pepper  &  L.  Dig. 

1894,  "Limited  Partnership,"  §  18.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  i 
1713.  Cf.  Gibb  v.  Mershon,  14  Wkly.  Notes  Cas.  89.  Metroix>litan  Nat.  Bank  v. 
Gruber,  Id.  12.    Vilas  Bank  v.  Bullock,  10  Phila.  309.    Where  the  names  of  all 

184  Pub.  St  1882,  c.  75,  §  3. 

186  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  19. 


§    198)  FIRM    -NAME.  447 

the  surname  of  the  special  partner  be  the  same  as  that  of  a  general 
partner,  such  surname  may  be  used  without  rendering  him  liable  as  a 
general  partner.  The  Ohio  statute  provides  that  a  firm  of  general 
partners  that  have  ti'ansacted  business  under  one  firm  name  for  more 
than  five  years  may  organize  a  special  partnership  to  continue  the 
same  business,  containing  any  of  the  same  or  additional  partners, 
and  adopt  the  firm  name  before  used,  publication  being  duly  made.*" 
In  California,**^  Idabo.'^^  and  Wyoming**''  the  name  of  a  special 
partner  may  not  be  used  unless  the  word  "Limited"  be  added  to  the 
firm  name.  So,  in  Maryland  **"  and  Florida,***  the  word  "Limited" 
must  be  attached  to  the  style  and  signature  of  the  firm  in  all  busi- 
ness transactions;  and,  if  this  be  done,  such  limited  partner  may 
take  part  in  the  business  without,  on  that  account,  being  deemed  a 
general  partner.  In  New  York  any  limited  partnership  may  use  the 
firm  name  of  any  former  general  or  limited  partJiership,  when  a  ma- 

the  partners  are  correctly  given  in  a  certificate  of  special  partnership,  the  use  of 
the  words  "and  Company"  in  the  firm  name,  as  a  collective  appellation  to  desi^ate 
the  persons  specifically  named,  does  not  render  a  special  partner  liable  as  a  gen- 
eral partner.  Hubbard  v.  Morgan,  Fed.  Cas,  No.  6,817.  Laws  1866,  c.  661, 
amending  the  limited  partnership  law  so  as  to  allow  the  use  of  the  words  "& 
Co."  in  the  firm  name,  "where  there  are  two  or  more  general  partners,"  without 
making  the  special  partners  liable  as  general  partners,  does  not  apply  wher*  ♦i>»re 
is  only  one  general  partner.  Buck  v.  Hopkins,  82  Hun.  29,  31  N.  Y.  Supp.  32-i. 
Section  13  of  the  limited  partnership  act  (1  Rev.  St.  765),  as  amended  by  La^'ss 
1866,  c.  661,  providing  that  the  partnership  business  shall  be  conducted  under  a 
firm  style  in  which  the  names  of  the  general  partners  only  shall  be  inserted,  ex- 
cept that  where  there  are  two  or  more  general  partners  the  firm  name  may  consist 
of  one  or  more  such  general  partners,  "with  or  without  the  addition  of  the  words 
'and  Company';  and  if  the  name  of  a  sjjecial  partner  shall  be  wsed  with  his  privity 
he  shall  be  deemed  a  general  partner," — does  not  permit  a  limited  partnership  to 
use  the  term  "and  Company,"  as  a  part  of  the  firm  name,  to  represent  a  special 
partner,  but  such  use  does  not  affect  the  validity  of  the  partnership,  nor  impose  a 
general  liability  on  the  special  partner  so  desisniated.  (31  N.  Y,  Supp.  324,  reversed.) 
Buck  V.  Alley,   145  N.  Y.  488,  40  N.  E.  236. 

136  Rev.  St.  1892,  §  3150. 

137  Civ.  Code  1886,  §  2510. 
13  8  Rev.  St.  1887,  §  3294. 
189  Rev.  St.  1887,  §  4093. 

1*0  Code  1888.  art.  73,  §  12,  Laws  1880,  c.  203. 

1*1  McClel.  Dig.  1881,  c  159,  §  2.    See  German  v.  Moodle,  9  Wkly.  Notes  Cas. 
22L 


448  LIMITED    PARTNERSHIPS.  (Ch.    10 

jority  of  the  partners,  general  or  special,  in  such  former  partner 
ship,  or  of  the  survivors,  are  members  of  the  new  one,  or  when  such 
majority  consents  to  the  use  of  such  firm  name  in  writing,  upon  pub- 
lishing and  recording  a  certificate  with  the  county  clerk.^*^  Under 
most  of  the  statutes,  if  the  name  of  a  special  partner  be  used  in  the 
firm  with  his  privity  ^*'  or  with  his  consent/**  he  is  deemed  a  gen- 
eral partner. 

142  Laws  1893,  c.  263. 

143  ALABAMA:  Code  1886,  §  1718.  ARKANSAS:  Sand.  &  H,  Dig.  1894, 
§  5460.  DELAWARE:  Rev.  Code  1874,  c.  64,  §  4.  DISTRICT  OF  COLUM- 
BIA: Comp.  St.  1894,  c.  43,  §  19.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  9. 
ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  16.  INDIANA:  Rev.  St.  1894, 
§  8115.  IOWA:  McClain'8  Code  1S88,  §  3342.  KANSAS:  Gen.  St.  1889,  par. 
3990.  MARYLAND:  Code  1888,  art.  73,  §  12;  Laws  1880,  c.  203.  MASSA- 
CHUSETTS: Pub.  St.  1882,  c.  75,  §  3.  MICHIGAN:  How.  Ann.  St.  1882,  S 
2354.  MINNESOTA:  Gen.  St.  1894,  §  2342.  NEVADA:  Gen.  St.  1885,  § 
4911.  NEW  HAMPSHIRE:  Gen.  Laws  1878,  c.  118,  §  6.  NEW  JERSEY: 
Gen.  St.  1895,  "Partnership,"  {  13.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pL  2,  c. 
4,  tit.  1,  §  13.  NORTH  CAROLINA:  Code  1883,  §  3100.  OHIO:  Rev.  St 
1892,  §  3150.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3853.  PENNSYL- 
VANI>:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  $  17.  RHODE  IS- 
LAND: Gen.  Laws  1896,  c.  157,  S  8.  SOUTH  CAROLINA:  Rev.  St.  1893,  | 
1419.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2411.  TEXAS:  Rev.  St.  1895, 
art.  3595.  VERMONT:  St.  1894,  §  4282.  VIRGINIA:  Code  1887,  §  2871. 
WASHINGTON:  Gen.  St.  1891,  §  2922.  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  7.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889,  §  1713.  Cf.  Idaho  Rev.  St 
1887.  §  "291. 

144  C'^LORADO:  Mills'  Ann.  St  §  3378.  DELAWARE:  Rev.  Code  1874, 
c.  64,  f  4.  INDIANA:  Rev.  St.  1894,  §  8115.  KANSAS:  Gen.  St  1889,  par. 
3990.  KENTUCKY:  St  1894,  c.  94,  §  3773.  MAINE:  Rev.  St  1883,  c.  33, 
§  6.  MASSACHUSETTS:  Pub.  St  1882,  c.  75.  §  3.  MICHIGAN:  How.  Ann. 
St  1882,  §  2354.  MISSISSIPPI:  Code  1892,  §  2770.  MISSOURI:  Rev.  St 
18S9,  §  7201.  MONTANA:  Civ.  Code  1895,  §  3343.  NEVADA:  Gen.  St  1885, 
§  4911.  NEW  HAMPSHIRE:  Gen.  Laws  1878,  c.  118,  §  6.  OREGON:  2 
Hill's  Ann.  Laws  1892,  §  3853.  RHODE  ISLAND:  Gen.  Laws  1896,  c  157, 
§  8.    VERMONT:    St  1894,  §  4282.    WASHINGTON:    Gen.  St  1891,  §  2922. 


§    199)  FIBM   SIGN.  449 


SAME— FIRM  SIGN. 

199.  In  several  states  the  partnership  must  post  a  sign  in 
some  conspicuous  place,  bearing  the  full  name  of 
all  the  partners.^** 

In  some  of  the  states  the  sign  must  distinguish  which  are  limited 
partners."'  In  Missouri  the  words  "Limited  Partners"  must  be 
added."^  The  statutes  of  some  states  do  not  speeiflcall}'  state  the 
result  of  a  failure  to  comply  with  the  statute  in  this  respect.  Penn- 
sylvania is  one  of  these  states;  but  in  V'andike  v.  Rosskam  "^  it  was 
said  that,  in  default  of  proof  that  his  name  was  painted  on  the  sign, 
a  special  partner  would  be  held  liable  as  a  general  partner.  The 
Kentucky  "^  and  Missouri  ^'^°  statutes  expressly  provide  that  in  case 
of  failure  to  keep  up  a  sign  at  its  place  of  business,  giving  the  style 
of  the  firm,  with  the  words  "Limited  Partners,"  the  special  partners 
shall  be  liable  as  general  partners.  The  New  York,"^  Ohio,"='  and 
South  Carolina"^  statutes  provide  that,  in  default  of  compliance, 

140  DAKOTA:  Comp.  Laws  1887,  §  4081.  KENTUCKY:  St.  1894,  c.  94, 
i  3779.  MINNESOTA:  Gen.  St.  1894.  §  2342.  MISSOURI:  Rev.  St.  1889,  § 
7207.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  13.  NORTH  DA- 
KOTA: Rev.  Code  1895,  §  4425.  OHIO:  Rev.  St.  1892,  §  3150,  amendment. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  18. 
SOUTH  CAROLINA:  Rev.  St.  1893,  §§  1432,  1434  (does  not  apply  to  special 
partners).  WISCONSIN:  Saub.  &  B.  Ann.  St  1889,  §  1713.  See  Rothchild  v. 
Hoge,  43  Fed.  97.  The  expression  "full  names"  of  persons  composing  the  associa- 
tion under  the  limited  partnership  act  means  the  names  in  the  form  habitually 
used  by  those  persons  in  business,  and  by  which  they  are  generally  known  in  the 
community,  and  does  not  mean  that  given  names  must  necessarily  be  spelled  out 
in  full  in  every  case.  Laflin  &  Rand  Co.  v.  Steytler,  146  Pa.  St  434,  23  Atl.  215, 
followed.    Gearing  v.  Carroll,  151  Pa.  St.  79,  24  Atl.  1045. 

146  DAKOTA:  Comp.  LawB  1887,  §  4081.  KENTUCKY:  St  1894,  c.  94,  § 
3779.  NORTH  DAKOTA:  Rev.  Code  1895,  §  442.  PENNSYLVANIA: 
Pepper  &  L.  Dig.  1894.  "Limited  Partnership,"  §  18.  WISCONSIN:  Sanb.  &  B. 
Ann.  St.  1889,  §  1713. 

14T  Rev.  St.  1889,  §  7207.  leo  Rev.  St  1889,  §  7207. 

148  67  Pa.  St  330.  i6i  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit  1,  §  13. 

14  9  St.  1894,  c.  94,  §  3779.  i62  Rev.  St.  1892,  §  3150,  amendment 

168  Rev.  St  1893,  §§  1432,  1434. 
GEO.PART.— 29 


450  LIMITED    PARTNERSHIPS.  (Ch.    10 

no  action  shall  abate  for  failure  to  prove  the  names  and  number  of 
the  partners. 

SAME— WHEN  PARTNERSHIP  BEGINS. 

200.  Until  the  certificate  is  duly  made,  acknowledged,  and 

recorded,  and,  in  states  w^here  it  is  required,  the 
affidavit  filed,  no  limited  partnership  is  deemed  to 
be  formed. 

201.  A    false   statement   in    the  certificate   or   affidavit,   in 

most  states,  renders  all  the  partners  liable  as  gen- 
eral partners. 

The  statutes  usually  provide  that  no  limited  partnership  shall  be 
deemed  to  have  been  formed  until  the  certiticate  shall  have  been 
made,  acknowledged,  and  recorded,  and,  where  an  aflidavit  is  re- 
quired, until  the  allidavit  is  tiled."*     So,  if  anj  false  statement  is 

ir.4  ALABAMA:  Code  188(i.  §§  1711,  1712.  ARKANSAS:  Sand.  &  H.  Di>:. 
1894,  §  5455.  CALIFORNIA:  CiT.  Code  1886,  §  2482.  COLORADO:  Mills' 
Anu.  St.  18U1,  S  'Mia.  CONNECTICUT:  Geu.  St  1888,  S  327i).  DAKOTA: 
Comp.  Lawa  1887,  §  4077.  DELAWARE:  Rev.  Code  1874,  c.  (Jl,  §  3.  DIS- 
TRICT OF  COLUMBIA:  Comp.  St,  1804,  c.  43,  Ji  8.  FLORIDA:  McClel. 
Dig.  1881,  c.  159,  §  7.  GEORGIA:  Code  1882,  §  1927.  IDAHO:  Rev.  St. 
1887,  §  3275.  ILLINOIS:  2  Sturr  &  C.  Anu.  St.  189U,  c.  34,  §  8.  INDIANA: 
Rev.  St.  1894,  §  8112.  IOWA:  McClaiu's  Code  1888.  §  333U-333G.  KANSAS: 
(ien.  SL  1889,  par.  3985.  KENTUCKY:  St.  1894,  c.  94,  §  3770.  MAINE: 
Rev.  St.  1883,  c.  33,  §  3.  MARYLAND:  Code  1888,  art.  73,  §  6.  MICHIGAN: 
How.  Ann.  St.  1882,  §  2349.  MINNESOTA:  Gen.  St.  1894,  §  23;!7.  MISSIS 
SIPPI:  Code  1892,  §  27G9.  MISSOURI:  Rev.  St.  1889,  S  7198.  MONTANA: 
Civ.  Code  1895,  §  329.'..  NEBRASKA:  Cobbcy's  Coasoi.  St  1891,  §  3238. 
NEVADA:  Gen.  St  1885,  §  49U8.  NEW  HAMPSHIRE:  Gen.  Laws  1878, 
0.  118,  §  4.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  8.  NEW  YORK: 
Rev.  St.  (9tb  Ed.)  pt  2,  c.  4,  tit.  1,  §  8.  NORTH  CAROLINA:  Code  1883,  § 
o094.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4421.  OHIO:  Rev.  St  1892, 
§  3147.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3851.  PENNSYLVANIA: 
I'epper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  9.  RHODE  ISLAND:  Gen. 
Laws  189G,  c.  157,  §  4.  SOUTH  CAROLINA:  Rev.  St  1893,  §  1414.  TEN- 
NESSEE: Mill.  &  V.  Code  1884,  §  2405.  TEXAS:  Rev.  St  1895,  art.  3590. 
UTAH:  Comp.  Laws  1888,  §  2480.  VERMONT:  St  1894,  §  4279.  VIR- 
GINIA. Code  1887,  §  286G.  WASHINGTON:  Gen.  St.  1891,  §  2920.  WEST 
V'IRGINIA:  Code  1891,  c.  100,  §  4.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889. 
I  1708.     WYOMING:    Rev.  St  1887,  §  4074, 


§§    200-201)  WHEN    rARTNERSIIlP    BEGINS.  451 

made  in  such  certificate  or  aflBdavit,  ali  tliose  interested  in  the  part- 
nership are,  in  nearly  all  states,  liable  as  general  partners.^"*  In 
Missouri  the  statute  provides  that  the  person  making  a  false  affidavit 
shaJl  be  deemed  guilty  of  perjury,  ajid  punished  with  the  penalties 

150  ALABAMA:  Code  1S81J,  §  1713.  AUKAMSAS:  Sand.  &  li.  Dig.  1894, 
§  5455.  CALIFORNIA:  Civ.  Code  188(5,  §  2480.  COLORADO :  Mills"  Ann. 
St.  1891.  §  3376.  CONNECTICUT:  Gen.  St.  1888,  §  'S'2S'2.  DAKOTA:  Comp. 
Laws  1887,  §  4U75.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  9. 
FLORIDA:  McClel.  Dig.  1881,  c  159,  §  7.  GEORGIA:  Code  1882,  §  1927. 
IDAHO:  Rev.  St.  1887,  §  3273.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  189(5,  c. 
84,  §  8.  INDIANA:  Rev.  St.  1894,  §  8112.  IOWA:  McClain's  Code  1888, 
§  3337.  KANSAS:  Gen.  St  1889,  par.  3985.  KENTUCKY:  St.  1894,  c.  94, 
§  3770.  MAINE:  Rev.  St.  1883,  c.  33,  §  4.  MARYLAND:  Code  1888,  art. 
73,  i  tJ.  MASSACFIUSETTS:  Pob.  St  1882,  c.  75,  §  4.  MICHIGAN:  How. 
Ann.  St.  1882,  §  2349.  MINNESOTA:  Gen.  St.  1894,  §  2337.  MISSISSIPPI: 
Code  1892.  §  2709.  MISSOURI:  Rev.  St.  1889,  §  7198.  MONTANA:  Civ. 
Code  189.-),  §  3293.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  §  3238.  NE- 
VADA: Gen.  St.  18S.J.  §  4908.  NEW  HAMPSHIRE.  Gen.  Laws  1878,  c. 
118,  §  4.  NEW  JERSEY:  Gen.  St.  1895.  "Partnership,"  §  8.  NEW  YORK: 
Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  8.  NORTH  CAROLINA:  Code  1883,  § 
3095.  NORTH  DAKOTA:  Rev.  Code  1895.  §  4419.  OHIO:  Rev.  St.  1892, 
S  314.J.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3851.  PENNSYLVANIA: 
Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  9;  RHODE  ISLAND:  Gen. 
L:iws  189(5.  c.  1.-37,  §  7.  SOUTH  CAROLINA:  Rev.  St.  1893,  §  1414.  TEN- 
NESSEE: Mill.  &  V.  Code  1884,  §  2406.  TEXAS:  Rev.  St  1895,  art.  8590. 
VERMONT:  St.  1894,  §  4279.  VIRGINIA:  Code  1887,  §  28G8.  WASHINGTON: 
Gen.  St.  1891,  §  2920.  WEST  VHUilNIA:  Unle  1891,  c.  100,  §  4.  WISCON- 
SIN: Sanb.  &  B.  Ann.  St  1889,  §  1708.  WYOMING:  Rev.  St  1887,  §  4072. 
See  Hite  Natural  Gas  Co.s  Appeal,  118  Pa.  St  430.  12  Atl.  2G7;  Kohler  v.  Lin- 
denmeyr,  129  N,  Y.  498.  29  N.  E.  957.  A  certificate  of  a  special  partner 
staled  that  he  contributed  goods  to  a  certain  amount  to  the  assets  of  the  firm, 
but  it  appeared  that  part  of  the  amount  so  contributed  consisted  of  a  debt  of  the 
firm  which  the  special  partner  held  as  assignee,  and  which  was  afterwards  paid 
to  him  by  the  firm.  Held,  that  the  certificate  was  misleading  and  deceptive,  and 
the  special  partner  was  chargeable  with  the  debts  of  the  firm  as  a  general  partner. 
Wilson  V.  Bean.  33  111.  App.  529.  Though  by  Act  Pa.  March  21,  1830,  §  8  (P.  L. 
143).  if  any  false  statement  is  made  in  the  certificate  or  affidavit  in  the  formation 
of  a  limited  partnership,  all  interested  are  liable  as  general  partners,  the  intended 
special  partner  does  not  by  reason  of  such  false  statement  become,  m  fact,  a  general 
partner,  and  failure  to  give  notice  of  dissolution  does  not  render  him  liable  for 
tlie  subsequent  engagements  of  the  firm.  Tilge  v.  Brooks,  124  Pa.  St.  178,  16  All. 
748w 


452  LIMITED   PARTNERSHIPS.  (Ch.   lO 

affixed  to  that  crime.""  The  Florida  statute  is  the  same."^  In 
Missouri,"'  Kentucky,*''  and  Oregon  *'°  the  limited  partnership  does 
not  begin  until  the  publication  is  made.  "^Tiere  the  partnership  is 
launched  before  complying  with  all  the  requirements  of  the  statute, 
a  partnership  exists,  but  it  is  a  general  one."^  A  subsequent  com- 
pliance will  convert  it  into  a  limited  partnership,  unless  the  statute 
requires  the  various  steps  to  be  taken  at  a  particular  time. 

SAME— EENEWALS. 

202.  A  limited  partnership  is  renewed  for  an  additional 
term  in  substantially  the  same  manner  as  it  was 
originally  constituted. 

Renewals  or  continuances  of  a  limited  partnership  beyond  the  time 
fixed  for  its  termination  must,  in  most  of  the  states,  be  certified, 
acknowledged,  recorded,  published,  aud  an  affidavit  of  a  general  part- 
ner made,  in  states  where  an  affidavit  is  required,  in  the  maimer  re- 
quired for  an  original  partnership."^    And  in  nearly  all  states  a 

156  Rev.  St.  188U,  §  7197.  »»«  Rev.  St.  1889,  {  7198. 

167  McClel.  Dig.  1881,  c.  irj9,  §  7.  i6»  St.  1894,  c.  94,  §  3770. 

160  2  Hill's  Auu.  Laws  1891',  J  3851. 

i«i  Robinson  v.  Mcintosh,  3  E.  D.  Smith  (N.  Y.)  'J21;  Rosenberg  v.  Block,  50 
N.  Y.  Super.  Ct.  357;  McGcbee  v.  Powell,  8  Alu.  827;  Gray  v.  Gibson,  G  Mich.  300; 
Lancaster  v.  Cboate,  5  Allen  (Mass.)  530;  Gearing  v.  Carroll,  151  Pa.  St.  79. 
24  Atl.  1045.  Where  C.  and  II.,  who  were  trading  as  C.  &  Co.,  were  sued  as 
general  partners,  an  affidavit  of  defense,  filed  by  H.,  that  he  and  C.  had  formed, 
according  to  law,  a  limited  partnership,  in  which  he  was  the  special  partner,  aud 
that  he  had  done  nothing  to  render  himself  liable  generally,  but  which  did  not  say 
that  the  requisite  sign  was  posted  on  their  place  of  business,  was  insufficient  to 
prevent  judgment.     Bergner  &  Eugel  Brewing  Co.  v.  Cobb,  12  l*a.  Co.  Ct.  R.  4G0. 

102  ALABAMA:  Code  188G,  §  1716.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5458.  CALIFORNIA:  Civ.  Code  1886,  §  2485.  CONNECTICUT:  Gen.  St. 
1888,  §  3281.  DAKOTA:  Comp.  Laws  1887,  §  4080.  DELAWARE:  Rev. 
Code  1874,  c.  C4,  §  3.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  13. 
GEORGIA:  Code  1882,  §  1930.  IDAHO:  Rev.  St.  1887,  §  3278.  ILLINOIS: 
2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  11.  INDIANA:  Rev.  St.  1894.  §  8114. 
IOWA:  McClain's  Code  1S8S.  §  3340.  KANSAS:  Gen.  St.  1889.  par.  3988. 
KENTUCKY:  St.  1894,  c.  94,  §  3772.  MAINE:  Rev.  St.  1883,  c.  33,  §  5. 
MARYLAND:  Code  1888,  art.  73,  §  9.  MASSACHUSETTS:  Pub.  St.  1882, 
c.  75,  i  7.     MICHIGAN:     How.  Ann.  St.  1882,  §  2352.      MINNESOTA:     Gen. 


§  202;  RENEWALS.  453 

partnership  not  thus  renewed  or  continued  will  be  deemed  general.*'* 
This  is  expressly  stated  in  some  states,  but  it  is  implied  in  all.    Some 

St.  1894,  §  2340.  MISSISSIPPI:  Code  1892,  §  2775.  MISSOURI:  Rev.  St. 
1889,  §  7200.  MONTANA:  Civ.  Code  ISUo,  §  3298.  NEBRASKA:  Cobbey's 
Consol.  St.  1891,  §  3241.  NEVADA:  Gen.  St.  1885,  §  4910.  NEW  HAMP- 
SHIRE: Gen.  Laws  1878,  c.  118,  §  9.  NEW  JERSEY:  Gen.  St.  1895,  "Part- 
nership," §  11.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4.  tit.  1,  §  11.  NORTH 
CAROLINA:  Code  1883,  §  3098.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4424. 
OHIO:  Rev.  St.  1892,  §  3148.  OREGON:  2  Hill's  Ann.  Laws  1892,  §  3852. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  13.  RHODE 
ISLAND:     Gen.    Laws    1890,    c.    157,    §    G.     SOUTH    CAROLINA:     Rev.    St. 

1893,  §  1417.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2409.  TEXAS:  Rev. 
St.    1895,    art.   3593.      UTAH-      Comp.    Laws    1888.   §    2483.      VERMONT:     St. 

1894,  §  4281.  VIRGINIA:  Code  1887,  §  2809.  WASHINGTON:  Gen.  St. 
1891,  §  2921.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  6.  WISCONSIN: 
Sanb.  &  B.  Ann.  St.  1889,  §  1711.  WYOMING:  Rev.  St.  1887,  §  4077.  If  the 
statement  in  the  renewal  certificate  as  to  amount  of  capital  contributed  to  the 
renewed  partnership  is  false,  the  partnership  continues  as  a  general  partnership. 
Fifth  Ave.  Nat.  Bank  v.  Colgate,  55  N.  Y.  Super.  Ct.  541;  Merchants'  &  Traders' 
Bank  v.  Colgate,  Id.  568.  The  certificate  and  affidavit  of  renewal  should  truly 
state  what  capital  belonging  to  the  special  partner  remained  in  the  old  firm  to  be 
used  by  the  new  firm,  and  that,  therefore,  evidence  ia  admissible  to  show  the 
falsity  of  such  statement.  Fifth  Ave.  Bank  v.  Colgate,  54  N.  Y.  Super.  Ct.  188. 
A  partner  in  commendam  contributed  $40,000  to  the  partnership  funds.  Be- 
fore the  expiration  of  the  partnership,  the  term  was  extended.  At  that  time  all 
the  capital  of  the  firm  had  been  lost,  except  $7,000  of  the  money  advanced  by  the 
partner  in  commendam.  Held,  that  under  Rev.  Civ.  Code  La.  art.  2842,  which 
limits  the  liability  of  a  partner  In  commendam  to  the  sum  which  he  agrees  to 
contribute,  such  partner  was  not  liable  for  the  deficiency  of  ?!33.<XK);  the  extension 
not  being  the  creation  of  a  new  partnership,  and  there  being,  therefore,  no  agree- 
ment to  furnish  a  further  sum,  or  to  make  good  the  loss  on  the  sum  originally 
contributed.      Arnold  v.  Danziger,  30  Fed.  898. 

103  ALABAMA:     Code  1886,  §  1716.     ARKANSAS:     Sand.  &  H.  Dig.  1894. 
§  5458.      DISTRICT  OF  COLUMBIA:      Comp.  St.  1894,  c.  43,  §  14.      GEOR- 
GIA:    Code    1882,    §    1930.     IDAHO:     Rev.    St.    1887,    §    3291.     INDIANA 
Rev.    St.    1S94,    §   8114.     IOWA:     McClain's   Code    1888,    §   3340.     KANSAS 
Gen.  St.  1889,  par.  3988.     MAINE:     Rev.  St.  1883,  c.  33,  §  5.     MARYLAND 
Code  1888,  art.  73,  §  9.     MICHIGAN:     How.  Ann.  St.  1882,  §  2352.     MINNE- 
SOT.V:     Gen.    St.   1894,   §  2340.     MISSISSIPPI:     Code   1892,   §   2776.     MIS- 
SOURI:    Rev.  St.  1889,  §  7200.     MONTANA:     Civ.  Code  1895,  §  3298.     NE- 
BRASKA:     Cobbey's    Consol.    St.    1891,    §   3241.      NEVADA:      Gen.    St.    1885, 
i  4910.    NEW  HAMPSHIRE:      Gen.  Laws  1878,  c.  118,  §  9.     NEW  JERSEY: 
Gen.  St  1895,  "Partnership,"  §  11.     NEW  YORK:     Rev.  St.  (9th  Ed.)  pt.  2, 
c.  4,  tit.  1,  §  11,     NORTH  CAROLINA:     Code  1883,  §  3098.     OHIO:     Rev. 


454  UMITED    PARTNERSHIPS.  (Ch.    10 

of  the  statutes  make  slight  changes  in  the  provisions  for  renewals. 
Thus,   in  Tennessee,   no  publication   of  such   renewal   is  required, 

St.  1892,  §  3148.  OREGON:  2  Hill's  Ann.  Laws  1S92,  §  3852.  PENNSYLr 
VANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership."  §  13.  RHODE 
ISLAND:      Gen.    Laws    18'JG,    c.    157,    §   6.      SOUTH    CAROLINA:      Rev.    St. 

1893.  §  1417.  TENNESSEE:  Mill.  &  V.  Code  1884.  §  2409.  TEXAS:  Rev. 
St.   1895,   art.   3593.      UTAH:     Comp.    Laws   1888,   §   2483.      VERMONT:      St. 

1894,  §  4281.  VIRGINIA:  Code  1887,  §  28G9.  WASHINGTON:  Gen.  St. 
1891,  •§  2921.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  6.  WISCONSIN: 
Sanb.  &  B.  Ann.  St.  1889.  §  1711.  WYOMING:  Rev.  St.  1S87,  §  4090.  See 
Haggerly  v.  Taylor,  10  I'aigc  (N.  Y.)  261;  Hirsch  v.  Vanuxem,  15  Wkly.  Notes 
Cas.  467;  Tindal  v.  Park,  154  Pa.  St.  36,  26  Atl.  300.  Where,  under  the  act 
of  1836,  it  is  sought  to  renew  a  limited  partnership  djiring  the  period  between 
the  expiration  of  the  old  firm  and  the  date  of  renewal,  such  partnership  Is  gen- 
eral, and  the  special  partners  are  liable  for  all  debts.  Haddock  v.  Manufactur- 
ing Corp.,  109  Pa.  St.  372,  1  Atl.  174.  If  a  limited  partnership  is  renewed,  with 
the  capital  contributed  originally  by  the  special  partners  impaired,  the  latter  are 
liable  as  general  partners.  Fourth  St.  Nat.  Bank  v.  Haines,  3  Pn.  Dist.  R.  437. 
Where  the  amount  of  capital  contributed  by  special  partners  is  still  in  the  busi- 
ness, and  its  form  is  properly  set  out  in  the  renewal  certificate,  special  partners 
are  not  liable  as  general  partners,  though  there  may  be  some  (lebt.><  outstanding 
against  the  firm.  Reitzel  v.  Haines,  Id.  523.  Since  the  impairment  of  the 
special  capital  at  the  time  of  the  i)artuership's  renewal  makes  each  partner  liable 
generally,  an  averment  that  at  such  time  it  was  entirely  consumed  is  one  thai 
its  owners  must  specifically  deny  in  their  afiidavit  of  defense.  Siegel  ▼.  Wood. 
Id,  463.  Where  a  certificate  of  renewal,  which  is  ineffectual  because  it  recites 
a  change  in  the  names  of  the  general  partners,  is  tiled,  the  partners  are  not 
estopped  to  deny  that  they  constitute  a  limited  partnership,  if  there  is  not  evi- 
dence that  any  creditor  gave  credit  to  the  firm  as  being  a  limited  partnership,  or 
in  any  way  acted  on  the  faith  of  any  representations  that  it  was  such.  Hardt 
V.  Levy,  72  Hun,  225,  25  N.  Y.  Suiip.  248.  An  attempted  renewal,  which  is  in- 
effectual because  the  certificate  recites  the  introduction  of  a  new  general  partner, 
cannot  create  a  new  limited  partnership  where  the  recital  of  the  certificate  as  to 
the  contribution  of  the  special  partner  is  that  the  whole  amount  contributed  bj 
him  remains  in  the  partnership,  as  the  statute  requires  the  contribution  of  the 
special  partner  to  be  paid  in  cash.  Hardt  v.  Levy,  72  Hun,  225,  25  N.  Y 
Supp.  248.  The  capital  originally  contributed  by  special  partners  to  a  limited 
partnership  is  not,  on  renewal,  "unimpaired  and  undiminished,"  though  the  part- 
nership has  merchandise  to  more  than  that  amount,  where  it  is  in  fact  insolvent. 
Special  partners  are,  in  case  of  a  false  statement  in  the  certificate  on  renewal 
of  a  limited  partnership,  that  their  contribution  remained  unimpaired  and  un- 
diminished, liable  on  notes  of  the  partnership  given  after  such  renewal  in  place 
of  matured  notes  issued  before  the  renewal.  Fourth  St.  Nat.  Bank  v,  Whitaker, 
170  I'a.  St.  297,  33  Atl.  100.      A  special  partner's  liability  as  general  partner,  by 


§    203)  RIGHTS    AND    LIABILITIES.  455 

though  required  in  the  first  instance.*'*  In  Ck)nnecticut  publica- 
tion for  two  weeks  ouly  is  enough.*'"  In  several  states  no  affidavit 
is  required  in  case  of  renewal.*"  In  North  Carolina  the  affidavit 
may  state  that  the  cash  was  orij^rinally  paid  in,  and  has  not  been 
impaired,  but  is  represented  by  stock.*'^  In  Missouri  the  new  state- 
ment must  set  forth  that  the  books  of  the  firm  have  been  balanced, 
and  the  balance  of  profit  or  loss,  as  the  case  may  be,  ascertained, 
and  also  the  amount  to  the  credit  of  the  special  partners  on  said 
books.*'*  In  New  Hampshire  the  renewal  must  be  made  within  30 
days  after  the  dissolution.*" 

EIGHTS  AND  LIABILITIES. 

203.  Unless  other-wise  provided  for  by  statute,  the  mem- 
bers of  a  limited  partnership  are  subject  to  all  the 
liabilities,  and  entitled  to  all  the  rights,  of  general 
partners.  Questions  peculiar  to  limited  partnerships 
-will  be  considered  under  the  folio-wring  heads: 

(a)  Liability  for  debts  (p.  45G). 

(b)  Defective  or  delayed  formation  (p.  458). 

(c)  Rights  in  firm  property  (p.  461). 

(d)  Withdrawal  of  capital  (p.  463). 

(e)  Alteration  (p.  4(18). 

(f)  Interference  (p.  472). 

reason  of  a  false  statement,  in  the  certificate  on  renewal  of  a  limited  partnership, 
that  the  capital  contributed  by  special  partners  remained  unimpaired  and  un- 
diminished, is  not  affected  by  the  fact  that  he  believed  the  statement  to  be  true; 
Act  183G  declaring  all  parties  liable  as  general  partners  "if  any  false  statement 
be  made  in  such  certiHcate."     Keitzel  t.  Haines,  170  Pa.  St.  300,  33  Atl.  103. 

i«4  Mill.  &  V.  Code  1SS4,  §  2409. 

i«8  Gen.   St.    1888,   §   3281. 

168  CONNECTICUT:  Gen.  St.  1888,  §  3281.  KENTUCKY:  St.  1894,  c. 
94,  §  3772.  VIRGINIA:  Code  1887,  |  28G9.  WEST  VIRGINIA:  Code  1891, 
c.  100,  §  6. 

»«T  Code  1883,  S  3098.  i«8  Rev.  St.  1889,  S  7200. 

!•»  Laws  1879,  c  15. 


456  LIMITED    PARTNERSHIPS.  (Ch.    10 

SAME— LIABILITY  FOR  DEBTS. 

204.  The  liability  of  the  general  partners  to  creditors  is 

the  same  as  in  ordinary  partnerships. 

205.  Where   all   statutory  requirements   have   been    com- 

plied "with,  special  partners  are  not  personally  lia- 
ble for  any  debts  of  the  partnership. 

In  some  states  the  statutes  provide  that  the  special  partners  shall 
not  be  personally  liable  for  the  debts  of  the  partnership;  ^^°  in 
others,  the  provision  is  that  they  shall  not  be  liable  beyond  the  fund 
contributed  by  them  to  the  capital.^"  The  meaning  is  the  same  in 
either  case.    In  Georgia*^'  and  Pennsylvania^^*   the  statute  pro- 

»T0  DELAWARE:  Rev.  Code  1874,  c.  64,  S  2.  ILLINOIS:  2  Starr  &  C. 
Ann.  St.  1806,  c.  84,  §  2.  INDIANA:  Kiv.  St.  18M,  §  8110.  KENTUCKY: 
St.  18114,  c.  94,  §  3768.  MASSACHUSETTS:  Pub.  St  1882.  c.  75,  §  2.  MIS- 
SOURI: Rev.  St.  1889,  §  7196.  MONTANA:  Civ.  Code  1895,  S  3331.  NE- 
VADA: Gen.  St  1885,  {  4906.  NEW  HAMPSHIRE:  Gen.  Laws  1878,  c. 
118,  §  2.  OHIO:  Rev.  St.  1S92,  §  3142.  OREGON:  2  Hill's  Ann.  Laws 
1892,  §  3849.  RHODE  ISLAND:  Gen.  Laws  1S96,  c.  157,  §  2.  VERMONT: 
St,  1894,  §  4277.  VIRGINIA:  Code  1887,  §  2864.  WASHINGTON:  Gen. 
St  1891,  §  2918.      WEST   VIRGINIA:      Code  1891,  c.   100,  {  2. 

iTi  ALABAMA:  Code  1886,  §  17o6.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
15448.  CALIFORNIA:  Civ.  Code  1886,  S  2501.  COLORADO:  Mills'  Ann. 
St  1891,  §  3370.  CONNECTICUT:  Gcu.  St  1888,  §  3277.  DAKOTA: 
Comp.  Laws  1887,  §  4091.  DISTRICT  OP  COLUMBIA:  Comp.  St  1894,  c.  43, 
8  4.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  1.  GEORGIA:  Code  1882,  } 
1921.  IDAHO:  Rev.  St.  1887,  §  3288.  KANSAS:  Gen.  St  1889,  par.  397a 
MAINE:  Rev.  St  1883,  c.  33,  §  1.  MARYLAND:  Code  1888,  art.  73,  §  2. 
MINNESOTA:  Gen.  St  1894,  §  2331.  MISSISSIPPI:  Code  1892,  §  276.3.  NE- 
BRASKA: Cobbey's  Cousol.  St  1891,  §  3232.  NEW  JERSEY:  Gen.  St  1895, 
"Partnership,"  §  2.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2.  c.  4,  tit  1,  §  2. 
NORTH  CAROLINA:  Code  1883.  §  3089.  NORTH  DAKOTA:  Rev.  Code 
1895,  §  4435.  OHIO:  Rev.  St  1892,  §  3142.  PENNSYLVANIA:  Pepper  &  L. 
Dig.  1894,  "Limited  l'artuer«hip,"  §  2.  SOUTH  CAROLINA:  Rev.  St  1893, 
i  1408.  TEXAS:  Rev.  St  1895,  art  3584.  UTAH:  Comp.  Laws  1888,  §  2474. 
WYOMING:  Rev.  St  1887,  §  4087.  Cf.  Lachomette  v.  Thomas,  5  Rob.  (La.)  172; 
Wisner  v.  Ocumpaugh,  71  N.  Y.  113.  As  to  the  liability  of  a  special  partner  for 
trespass  committed  by  an  agent  of  the  firm,  see  McKnight  v.  RatclifE,  44  Pa.  St  156. 

IT 2  Code  1882,  §  1934. 

»T»  Pepper  &  L.  Dig.  1894,  "Limited  I'artnership,"  $  21. 


§§    204-205)  LIABILITY    FOR    DEBTS.  457 

vides  that  special  partners  contributing  capital  shall  not  be  liable 
for  debts  previously  contracted  by  the  general  partners.  Every 
partner  guilty  of  fraud  in  partnership  affairs  is  liable  civilly  to  the 
person  injured  to  the  extent  of  his  damage,^^*  and  also,  in  many 
states,  to  an  indictment  as  for  a  misdemeanor. ^^"^  Liability  as  a 
general  partner  is  the  penalty  for  most  violations  of  the  provisions 
of  the  limited  partnership  acts."* 

IT 4  ALABAMA:  Code  1SS6.  §  1724.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  54<3G.      FLOUIUA:      McCleL  Dig.  1S81.  c.  ICy,  §  15.      GEORGIA:      Code  1S82, 

5  1938.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1890,  c.  84,  §  21.  IOWA:  Mc- 
Clain's  Code  1SS8,  §  3348.  KANSAS:  Gen.  St.  1889.  par.  3994.  MARYLAND: 
Code  1SS8.  art.  27,  §  118.  NEBRASKA:  Cobbey's  Consol.  St.  1891.  §  3249. 
NEW  JERSEY:  Gvn.  St.  lS9r).  'Tarmership,"  §  19.  NORTH  CAROLINA: 
Code  1883,  S  3106.  OHIO:  Rer.  St.  1892,  §  3155.  PENNSYLVANIA:  Pep- 
per &  L.  Dig.  1894,  "Limited  Partnership."  §  25.  SOUTH  CAROLINA:  Rev. 
St  1893,  §  1423.  TENNESSEE:  Mill.  &  V.  Code  1884.  §  2417.  TEXAS:  Rev. 
St.  1895.  art.  3tXK).      "WISCONSIN:     Sanb.  &  B.  Ann.  St.  S  1724. 

iTB  ARKANSAS:  Saud.  &  H.  Dig.  1894.  §  54G(>.  CALIFORNIA:  Pen.  Code 
1880.  §  3.')8.  DAKOTA:  Comp.  Laws  1887,  S  0020.  FLORIDA:  McClel. 
Dig.  1881,  c.  159.  S  15.     GEORGIA:     Code  1882,  §  1938.     ILLINOIS:     2  Starr 

6  C.  Ann.  St.  189G,  c.  84.  §  21.  IOWA:  McClain's  Code,  1888,  §  SMS.  KAN- 
SAS: Gen.  St.  1889.  par.  3904.  MARYLAND:  Code  1888,  art.  27,  §  118. 
MINNESOTA:  Gen.  St.  1894.  S  2352.  NEBRASKA:  Cobbey's  Consol.  St. 
1891.  §  3249.  NEW  JERSEY:  Gen.  St  1895.  "Partnership,"  §  19.  NORTH 
CAROLINA:  Code  1883,  §  31  CM).  NORTH  DAKOTA:  Rev.  Code  1895,  §  7271. 
PENNSYLVANIA:  Laws  1885.  Acta  Nos.  38,  49.  TENNESSEE:  Mill.  &  V. 
Code  1884,  §  2417. 

i7«  See  post  pp.  463.  468,  472,  478.  As  to  when  executions  can  be  taken  out 
against  individual  property.  se<»  Whitall  v.  Williams.  0  Wkly,  Notes  Cas.  44.  A 
special  |)artner,  who  makes  such  representations  to  any  parties  as  to  his  interest  in 
his  firm,  bis  responsibility,  and  his  share  of  its  profits  as  to  lead  them  to  suppose  he 
is  personally  liable  as  a  general  partner,  and  to  induce  them  thereby  to  sell  goods  to 
his  firm,  will  be  held  liable  as  a  general  partner  for  all  purchases  so  made  of  said 
parties  after  the  date  of  those  representations.  Barrows  v.  Downs,  9  R.  I.  440. 
Where  a  limited  partnership  is  carried  on  in  the  name  of  an  individual,  and  a  suit 
is  brought  against  the  partners  upon  a  note  or  other  obligation  signed  by  such  in- 
dividual, the  legal  presumption  is  that  it  is  the  note  of  the  individual,  and  not  of  the 
partners.  And  the  plaintiff,  in  order  to  recover  against  the  partners,  must  not 
only  prove  the  execution  of  the  note,  but  go  further,  and  prove  either  that  the 
money  for  which  the  note  was  given  was  borrowed  on  the  credit  of  the  partnership, 
or  that  when  obtained  it  was  used  in  the  business  of  the  partnership.  Oliphant  v. 
Mathews,  16  Barb.  (N.  Y.)  OOS. 


458  LIMITED    PAUTNEIiSHIPS.  (Cil.    10 


SAME— DEFECTIVE  OR  DELAYED  FORMATION. 

206.  The  effect  of  defects  or  delays  in  the  formation  of  a 

limited  partnership  -will  be  considered 

(a)  With  reference  to  the  partners  themselves  (p.  458). 

(b)  With  reference  to  third  persons  ^p.  459). 

207.  EFFECT  INTER  SE— If  the   parties  ''intend   that   a 

special  partnership  shall  exist,  they  -will  be  bound 
to  observe  their  mutual  understanding  amongst 
themselves." 

It  has  been  seen"^  that,  if  the  business  of  the  partnership  is 
launched  before  compliance  with  the  statutory  requirements,  the 
statutory  protection  is  lost,  and  all  the  partners  are  liable  as  gen- 
eral partners.  It  has  also  been  seen  ^^'  that  the  theory  underlying 
the  limited  partnership  acts  is  the  protection  of  the  x)ublic.  The  stat- 
ute does  not  take  away  the  liberty  of  contract  of  the  partners.  As 
between  themselves,  their  rights  are  fixed  by  the  contract  they  have 
made,  although,  by  reason  of  noncompliance  with  the  statute,  they 
are  all  liable  as  general  i)artner8  to  third  persons.  If  they  "intend 
that  a  special  partnership  shall  exist,  they  will  be  bound  to  observe 
their  mutual  understanding  amongst  themselves.""'  In  Robin- 
son V.  Mcintosh  ^*°  it  was  said  that  it  is  by  no  means  clear  that, 
although  one  has  not  so  complied  with  the  statute  as  to  entitle 
himself  to  the  immunities  provided  for  a  special  partner,  he  may  not 
have  subjected  himself  to  all  the  disabilities  which  the  statute  an- 
nexes to  that  character.^*^     In  Lancaster  v.  Choate^"  it  was  said: 

17T  Aute.  p.  450.  ITS  Ante,  p.  422. 

17  9  Patterson  ▼.  Holland,  6  Grant,  Ch.  (U.  C.)  414.  417.  Cf.  Id.,  7  Grant,  Ch. 
(U.  C.)  1. 

180  3  E.  D.  Smith  (N.  Y.)  221,  233,  234. 

181  Cf.  Whilldin  t.  Bullock.  4  Wkly.  Notes  Cas.  234,  and  Hogg  v.  Ellis,  8 
How.  Prac.  (N.  Y.)  473,  where  It  was  said:  "The  limited  partner  is  a  partner  as 
much  as  the  general  partner,  and  there  is  nothing  to  prevent  him,  even  during  the 
continuance  of  the  partnership,  from  taking  an  active  part  In  its  concerns,  if  he 
chooses  to  bring  on  himself  the  statutory  consequences  of  a  liability  as  a  general 
partner.     The  statute  is  for  his  protection  if  he  will  conform  to  it.     It  is  not  any 


i«a5  AUpii  (Mass.)  530,  539. 


§§    208-209)  DEFECTIVE    OB    DELAYED    FORMATION.  459 

"We  do  not  intend,  however,  to  say  that  the  agreement  of  partner- 
ship has  no  validity;  for,  as  between  themselves,  all  their  settle- 
ments must  be  in  conformity  with  it;"  and  in  Whittemore  v.  Mac- 
donell  "^  it  was  said  that  a  special  partner,  by  interference,  merely 
incurs  the  liability  of  a  general  partner,  without  acquiring  his  au- 
thority. Where  the  liability  of  the  special  partner  as  a  general 
one  results  from  the  acts  of  the  general  partners,  they  are  estopped 
to  take  advantage  of  it;  and,  as  to  them,  the  partnership  is  lim- 
ited.^" 

208.  EFFECT  AS  TO  THIBD  PERSONS— Where  the  part- 

nership is  launched  before  the  statutory  require- 
ments are  complied  with,  all  the  partners  are  lia- 
ble to  third  persons  as  general  partners. 

209.  Where  the   organization   as   a    limited  partnership  is 

subsequently  perfected,  notice  must  be  given  pre- 
cisely as  in  the  case  of  the  retirement  of  a  partner 
in  an  ordinary  partnership. 

It  is  perhaps  unnecessary  to  say  more  upon  the  point  that,  when 
the  business  is  launched  before  the  statutory  requirements  are  com 

part  of  its  policy  to  prevent  him  from  acting  as  a  general  partner,  if  he  Is  willing 
to  asBume  tlie  liabilities  that  follow;  and,  if  he  \b  willing,  his  partners  have  no 
ground  of  complaint,  nor  the  creditors  of  the  lirm,  if  he  leave  their  rights  unim- 
paired. It  would  be  different  if  the  general  partners,  by  their  articles,  excluded 
the  limited  partner  from  a  control,  but  then  this  restriction  might  cease  at  the  ex- 
piration of  the  partnership.  The  statute  as  to  the  special  partner  is  that  'if  he 
shall  interfere,  contrary  to  these  provisions,  he  shall  be  deemed  a  general  partner' 
(1  Rev,  St  p.  7U6,  §  17),  and  that  is  the  only  penalty." 

188  6  U.  C.  C.  r.  547.  And  see  Abendroth  v.  Van  Dolsen,  131  U.  S.  66,  9  Sup. 
Ct.  619;  Waters  v.  Harris  (Super.  N.  Y.)  17  N.  Y.  Supp.  370.  An  agreement  for 
the  formation  of  a  limited  partnership,  executed  under  the  laws  of  New  York, 
but  not  recorded  so  as  to  become  effectual  for  the  purpose  designed,  has  no  tenden- 
cy to  prove  an  actual  general  partnership  between  the  parties  named  in  it,  in  the 
absence  of  extrinsic  evidence  to  show  that  they  had  actually  entered  into  business 
as  partners.    Gray  v.  Gibson,  6  Mich.  300. 

184  Durant  v.  Abendroth,  97  N.  Y.  132;  Brown  v.  Davis,  6  Ducr  (N.  Y.)  549; 
Hogg  v.  Ellis,  8  How.  I'rac.  (N.  Y.)  473;  Lancaster  ▼.  Choate,  5  Allen  (Mass.) 
530;  Guillow  v.  Peterson,  89  Pa.  SL  163;  Patterson  ▼.  HoUaud,  6  Grant.  Ch. 
<U.  C.)  414.  417. 


460  LIMITED    PARTNERSHIPS.  (Ch.    lO 

plied  with,  the  partners  are  all  liable  as  general  partners.  The 
exemption  from  liability  being  wholly  statutory,  it  is  incumbent 
upon  one  claiming  the  protection  of  the  statute  to  bring  himself 
within  its  terms.  If  the  organization  is  not  perfected,  the  intended 
special  partner  is  a  dormant  or  secret  partner,^®'^  unless,  by  active 
participation  in  the  firm  business,  he  becomes  an  ostensible  one.^*' 
The  change  from  a  general  partnership,  created  under  these  cir- 
cumstances, to  a  limited  partnership,  effected  by  completing  the 
steps  prescribed  by  statute,  is  not  regarded  as  the  dissolution  of  one 
firm,  and  the  formation  of  another;  for  no  new  contribution  of 
cash  capital  is  required,  and  there  is  no  distinction  between  the 
creditors  of  the  general  partnership  and  those  of  the  limited  one, 
except  in  so  far  as  the  liability  of  the  special  partner  is  concerned.^ ^^ 
But  notice  of  such  change  of  liability  must  be  given  as  in  the  case 
of  the  retirement  of  a  partner  in  a  general  partnership,  for  the 
change  from  a  general  to  a  special  partner  amounts  substantially 
to  a  retirement  The  rules  as  to  notice  under  such  circumstances 
apply,  mutatis  mutandis,  here.  Thus,  if  the  special  partner  has 
remained  dormant,  no  notice  either  to  former  dealers  or  to  the  pub- 
lic is  necessary."^  If  the  fact  that  he  is  a  partner  has  been  made 
known  in  any  way  to  one  dealing  with  the  firm,  such  person   ia 

185  Robinson  v.  Mcintosh,  3  E.  D.  Smith  (N.  Y.)  221;  Gray  v.  Gibson,  6  Mich. 
300;    Lachomette  v.  Thomas,  5  Rob.  (La.)  172. 

186  Robinson  t.  Mcintosh,  3  E.  D.  Smith  (N.  Y.)  221;  Tournade  v.  Hagedorn, 
5  Thomp.  &  O.  (N.  Y.)  288;  Gray  v.  Gibson,  6  Mich.  300;  Lachomette  v.  Thom- 
as, 5  Rob.  (La.)  172;  Vanhom  v.  Corcoran,  127  Pa,  St.  255,  18  Atl.  16,  In  case 
of  a  defective  formation,  a  creditor  who  knew  of  the  attempted  creation  of  a 
limited  partnership  can,  nevertheless,  hold  the  special  partner  as  a  general  one, 
Eliot  V.  Himrod,  16  Wkly.  Notes  Cas.  189;  Sheble  v.  Strong,  128  Pa.  St.  315,  18 
Atl.  397;  Manhattan  Brass  Co.  v.  Allin,  35  III.  App.  336.  If,  in  an  attempt  to 
form  a  limited  partnership,  a  special  partner  fails  to  put  in  the  capital  agreed  upon, 
he  is  liable  generally,  and  a  complaint  in  an  action  against  such  partners  need 
only  allege  a  partnership  in  the  ordinary  form,  and  proof  of  the  circumstances  ren- 
dering such  special  partner  liable  as  a  general  partner  may  be  introduced  on  the 
trial.  Sharp  v.  Hutchinson,  100  N.  Y.  533,  3  N.  E.  500.  Cf.  Stone  v.  De  Puya, 
4  Sandf.  (N,  Y.)  681;  Rosenberg  v.  Block,  50  N.  Y.  Super.  Ct.  357.  One  who 
aids  and  assists  in  the  organization  of  a  limited  partnership  cannot  thereafter  hold 
the  members  liable  as  general  partners,  upon  the  ground  that  such  organization 
was  defective.    Allegheny  Nat.  Bank  v.  Bailey,  147  Pa.  St.  Ill,  23  Atl.  439. 

187  Bates,  Lim.  Partn.  §  76.  iss  gee  ante,  p.  264. 


§    210)  BIGHTS    IN    FIRM    PROPERTY.  4(jl 

entitled  to  actual  notice.""  If  the  fact  is  made  known  generally, 
the  public  is  entitled  to  constructive  notice  by  publication,  and  for- 
mer dealers  to  actual  notice.^ ^° 


SAME— RIGHTS  IN  FIRM  PROPERTY. 

210.  The  special  partner  has  an  interest  in  firm  property 
amounting  to  an  equitable  title. 

There  have  been  many  attempts  to  define  the  nature  of  the  in- 
terest, if  any,  that  a  special  partner  has  in  the  firm  property,  by 
likening  it  to  other  recognized  legal  relations.  None  of  these  at- 
tempts have  been  wholly  satisfactory,  perhaps  for  the  reason  that 
the  special  partner's  interest  is  sui  generis.^®^  In  some  cases  it  is 
said  that  the  special  partner  has  no  interest  as  part  owner  of  the 
property.  In  one  case  it  was  said :  "The  position  of  a  special  part- 
ner is  very  analogous  to  that  of  the  holders  of  stock  in  an  incor- 
porated company."  ""  A  limited  partnership  is  "a  kind  of  quasi 
corporation."'  ^*'  In  another  case  the  interest  was  said  to  be  more 
in  the  nature  of  a  debt  than  like  corporate  stock. ^®*  In  this  last 
case  it  was  said:  "The  interest  of  Harris  [the  special  partner]  in 
the  property  of  a  limited  partnership  can  hardly  be  said  to  be 
an  interest  in  the  property  of  the  firm.  He  advanced  to  the  firm 
a  sum  of  money  which  he  is  entitled  to  receive  back,  with  interest, 
at  the  termination  of  the  partnership.  He  is  also  entitled  to  a 
share  in  the  profits.  But  he  is  to  no  further  extent  the  owner  of 
the  property.     Upon  payment  of  these  claims,  the  property  would 

189  See  ante,  p.  261.  i^o  See  ante,  p.  264. 

181  As  to  the  position  of  the  special  partner,  Mr.  James  Parsons  says  (Partn. 
p.  86):  "The  courts  took  the  statutory  language,  and  spelt  out  the  word  N,  O,  N,  D, 
E,  S,  C,  R,  I,  P,  T,  for  the  special  partner.  They  did  not  classify  him  as  a  part- 
ner, except  to  victimize  him  for  the  nonobservance  of  any  trifling  formality,  but 
they  treated  him  as  an  anomaly  in  law.  If  the  legislature  had  not  enacted  him  a 
partner,  the  profession  would  have  made  him  a  creditor.  As  it  is,  he  runs  the 
gauntlet  of  the  profession."  As  to  the  general  partner's  power  to  transfer  tirm 
property,  see  Locke  v.  Lewis,  124  Mass.  1. 

182  Whittemore  v.  MacDonell,  6  U.  C.  C.  P.  547,  551. 
198  Hayes  v.  Bement,  3  Sandf.  (N.  Y.)  394,  397. 

18*  Harris  v.  Murray,  28  N.  Y.  574,  582.  And  see,  to  the  same  effect,  Brad- 
bury V.  Smith,  21  Me.  117. 


462  LIMITED    PARTNERSHIPS.  (Ch.    10 

belong  to  the  general  partners."  In  this  same  case,  Denio,  J.,  said: 
"If  the  interest  in  question  was  embraced  under  the  denomination 
of  evidences  of  debt  or  of  debts,  there  was  a  positive  inhibition 
against  selling  it  on  execution.  If  it  was  a  right  or  share  in  the 
stock  of  a  corporation  or  association,  it  might  be  thus  sold.  In  my 
opinion,  it  was  in  the  nature  of  the  interest  first  mentioned,  and  not 
of  corporate  stock.  It  was  a  sum  of  money  invested  in  the  part- 
nership enterprise,  to  be  reimbursed,  if  not  lost  in  the  business, 
at  the  end  of  the  period  during  which  the  partnership  business  was 
to  continue,  with  any  profits  which  had  been  earned,  and  which 
had  not  been  divided.  It  was  not  payable  in  praesenti,  and  prob- 
ably not,  in  strictness  of  language,  a  debt  at  all.  But  it  was  merely 
held  in  trust  for  the  special  partner  to  be  employed  in  the  business 
mentioned  in  the  articles,  and  finally  returned  to  the  special  part- 
ner, unless  lost  by  the  exigencies  of  the  business."  So,  in  a  Penn- 
sylvania case""*  the  contribution  of  the  special  partner  was  said 
to  be  in  the  nature  of  a  trust.  Mr.  Bates  says  ^»«  that  the  doctrine 
that  the  special  partner  has  no  interest  whatever  in  the  property, 
or  is  a  mere  creditor,  is  entirely  wrong.  Upon  the  whole,  the  true 
view  seems  to  be  that  the  special  partner  has  no  legal  title  to  the 
firm  property,  but  he  has  an  equitable  interest  or  claim  therein. 
This  claim  takes  priority  over  the  claims  of  individual  creditors  of 
the  general  partners,^ ®^  but  is  postponed  to  the  claims  of  cred- 
itors of  the  partnership.  This  is  sometimes  expressed  by  say- 
ing that  the  special  partner  is  a  creditor  of  the  firm  for  so  much 
capital,  with  the  usual  partner's  lien,  which  gives  him  priority  over 
all  individual  creditors  of  his  co-partners;  but  he  can  have  no 
greater  right  in  the  property  than  those  of  a  general  partner. 

196  Coffin's  Appeal,  106  Pa.  St.  280.         lee  Lim.  Partn.  §  70. 

i»7  Cf.  ante  p.  283.  If,  upon  the  dissolution  of  a  partnership,  general  or  limited, 
the  retiring  partner  bona  fide  assigns  all  his  interest  in  the  stock  and  effects  to  the 
remaining  partner,  the  same  becomes  separate  property,  and  will  be  distributable 
accordingly,  notwithstanding  the  subsequent  insolvency  of  the  remaining  partner. 
Upson  V.  Arnold,  19  Ga.  190.  A  judgment  confessed  by  one  partner  to  another, 
to  secure  the  amount  of  the  capital  stock  advanced  by  such  partner,  who  had 
agreed  to  enter  into  a  special  partnership,  but  became  a  general  partner  by  reason 
of  noncompliance  with  the  requisitions  of  the  act  of  assembly,  is  valid  against  a 
separate  creditor  of  the  partner  who  confessed  the  judgment.  Purdy  v.  Lacock, 
6  Pa.  St.  490. 


§§    211-212)  WITHDRAWAL    OF   PROFITS    OR    CAPITAL.  463 


SAME— WITHDRAWAL  OF  PROFITS  OR  CAPITAL. 

211.  No  part  of  the  sum  contributed  by  any  special   part- 

ner to  the  capital  stock  shall  be  withdrawn  by  him, 
or  paid  or  transferred  to  him  in  the  shape  of  div- 
idends, profits,  or  otherwise,  at  any  time  during 
the  continuance  of  the  partnership.  But  any  part- 
ner may  annually  receive  lawful  interest  on  the 
sum  so  contributed  by  him  if  the  payment  thereof 
does  not  reduce  the  original  capital. 

212.  The  penalty  prescribed  by  statute  for  violation  of  the 

above  rule  is 

(a)  In  most  states,  merely  liability  to  restore  the  amount 

withdrawn,  generally  with  interest  (p.  4G6). 

(b)  In  some  states,  liability  as  a  general  partner  (p.  466). 

The  above  prohibition  against  withdrawals  is  substantially  the 
same  in  all  states.^®*    The  express  permission  to  receive  lawful  in- 

188  ALABAMA:  Code  1886,  §  1720.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5462.  CALIFORNIA:  Civ.  Code  188G,  §  2493.  COLORADO:  Mills'  Ann. 
St.  1891,  §  3379.  CONNECTICUT:  Gen.  St.  1888,  §  3283.  DAKOTA:  Comp. 
Laws  1887,  §  4086.  DELAWARE:  Rev.  Code  1874,  c.  64,  §  5.  DISTRICT 
OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  21.  FLORIDA:  McClel.  Dig.  1881 
c.  159,  §  11.  GEORGIA:  Code  1882,  §  1934.  IDAHO:  Rev.  St.  1887,  §§  3283 
3284.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  18.  INDIANA:  Rev 
St.  1894,  §  8116.  IOWA:  McClain's  Code  1888,  §  3344.  KANSAS:  Gen.  St 
1889,  par.  3991.  KENTUCKY:  St.  1894,  c.  94,  §  3774.  MAINE:  Rev.  St 
1883,  c.  33,  §  7.  MARYLAND:  Code  1888,  art.  73,  §  13.  MASSACHUSETTS 
Pub.  St.  1882,  c.  75,  §  8.  MICHIGAN:  How.  Ann.  St.  1882,  §  2355.  MIN 
NESOTA:  Gen.  St.  1S94,  §  2344.  MISSISSIPPI:  Code  1892,  §  2772.  MON 
TANA:  Civ.  Code  1895,  §  3314.  NEBRASKA:  Cobbey's  Consol.  St.  1891,  § 
3245.  NEVADA:  Gen.  St.  1885,  §  4912.  NEW  HAMPSHIRE:  Gen  Laws 
1878,  c.  118,  §  12.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  15.  NEW 
YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  15.  NORTH  CAROLINA: 
Code  1883,  §  3102.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4430.  OHIO: 
Rev.  St.  1892,  §  3151.  OREGON:  2  Hill's  Ann,  Laws  1892,  §  3854.  PENN- 
SYLVANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  21,  RHODE 
ISLAND:  Gen.  Laws  1896,  c.  157,  §  9.  SOUTH  CAROLINA:  Rev.  St.  1893, 
§   1430.     TENNESSEE:    Mill.   &   V.    Code  1884,  §   2413.     TEXAS:    Rev.    St 


464  LIMITED    PARTNERSHIPS.  (Ch.   10 

terest,  provided  it  does  not  reduce  tlie  original  capital/"  seems 
unnecessary,  and  does  not  appear  in  all  the  statutes;  and  the  same 
may  be  said  of  the  provision,  which  occurs  in  the  statutes  of  sev- 
eral states,  that,  where  profits  are  actually  earned,  the  special  part- 
Qer  may  receive  his  proportion.^"* 

Wlwi  is  a  WithdraicaZ. 

The  term  "withdrawal,"  in  this  connection,  has  acquired  a  tech- 
nical significance.     It  does  not  mean  the  withdrawal  of  the  person 

1895,  art.  3597.      UTAH:    Comp.   Laws  1888,  S  2487.      VERMONT:    St.  1894, 

5  4283.  VIRGINIA:  Code  1887,  §  2871:.  WASHINGTON:  Gen.  St.  1891,  % 
2923.     WEST    VIRGINIA:    Code   1891,   c.    100.   §  8,     WISCONSIN:       Sanb. 

6  B.  Ann.  St  1889,  S  1714.      WYOMING:    Itev.  St  1887,  §§  4082,  4083. 

i»»  ALABAM-l:  Code  1880,  §  1720.  ARKANSAS:  Saud.  ^  H.  Dig.  1894. 
t  54G2.  CALIFORNIA:  Cir.  Code  1860,  i  2494.  DAKOTA:  Comp.  Lawa 
1887,  §  4087.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  2L  FLOR- 
IDA: McClel.  Dig.  1S81,  c.  159.  §  11.  GEORGIA:  Code  1882,  §  1934.  IDAHO: 
Rev.  St  1887,  §  3284.  ILLINOIS:  2  Starr  &  C.  Ann.  St  189G,  c.  84.  §  18. 
INDIANA:  Rev.  St  1894,  §  8110.  IOWA:  MeCiaiu's  Code  1888,  §  3344. 
MARYLAND:  Code  1888,  art  73,  §  13.  MISSISSIPPI:  Code  1892,  §  2772. 
NEW  HAMPSHIRE:  Gen.  Law>  1878,  c.  118,  i  7.  NEW  JERSEY:  Gen.  St 
1895.  "Partnership."  §  15.      NEW  YORK:     Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1, 

5  15.  NORTH  CAROLINA:  Code  1883,  §  3102.  NORTH  DAKOTA:  Rev. 
Code  1895,  §  4431.     OHIO:    Rev.  St  1892,  §  3151.      PENNSYLVANIA:    Pepper 

6  L.  Dig.  1894,  "Limited  Partnership,"  §  21.  SOUTH  CAROLINA:  Rev.  St 
1893,  {  1430.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2413.  TEXAS:  Rev.  St 
1895,  art  3597.  WASHINGTON:  Gen.  St  1891,  t  2923.  WYOMING:  Rev. 
St  1887,  §  4083. 

»oo  ALABAMA:  Code  1886,  |  1720.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
S  5462.  CALIFORNIA:  Civ.  Code  1880,  §  24'J4.  DAKOTA:  Comp.  Laws  1887, 
§  4087.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  S  21.  FLORIDA: 
McCleL  Dig.  1881,  c.  159.  §  11.  GEORGIA:  Code  1882,  i  1934.  IDAHO: 
Rev.  St  1887,  §  3284.  ILLINOIS:  2  Starr  &  C.  Ann.  St  1890,  c.  84,  §  18. 
IOWA:  McClain'8  Code  1888,  §  3344.  KANSAS:  Gen.  St  1889,  par.  3991. 
MARYLAND:  Code  1888,  art.  73,  §  13.  MISSISSIPPI:  Code  1892,  §  2772. 
NEW  JERSEY:  Gen.  St  1895,  "Partnership,"  §  15.  NEW  YORK:  Rev.  St 
(9th  Ed.)  pt  2,  c  4,  tit  1,  §  15.  NORTH  CAROLINA:  Code  1883,  i  3102. 
NORTH  DAKOTA:  Rev.  Code  1895,  §  4431.  OHIO:  Rev.  St  1892,  S  3151. 
PENNSYLVANIA:  Pepper  «&  L.  Dig.  1S94,  "Limited  Partnership,"  S  21. 
SOUTH  CAROLINA:  Rev.  St  1893,  §  1430.  TENNESSEE:  MiU.  &  V.  Code 
1884,  §  2413.  TEXAS:  Rev.  St.  1895,  art.  3597.  UTAH:  Comp.  Laws  1888. 
§  ii487.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  §  1714.  WYOMING:  Rev, 
St  1887,  i  4083. 


§§    211-212)  WITHDRAWAL    OF    PROFITS    OR   CAPITAL.  466 

from  the  firm,  or  the  sale  of  an  interest  to  a  co-partner  or  a  stranger. 
Such  acts  constitute  what  is  known  as  "alteration."  '"^  The  term 
"withdrawal"  is  confined  simply  to  an  excessive  division  of  profits. 
"Withdrawal  refers  to  the  division  of  profits  to  the  special  part- 
ner which  the  actual  earnings  cannot  afford,  and  which  are  there- 
fore an  encroachment  on  the  special  capital."  '°* 

It  is  quite  jtossible  that  a  withdrawal  maj  take  place  without  any 
of  the  partners  so  intending,  for  it  is  impossible  to  know  absolutely 
the  condition  of  the  capital  of  a  firm  having  numerous  and  large 
transactions  at  any  given  time,  so  muth  depending  upon  the  sol- 
vency of  debtors  and  other  similar  considerations.  So  it  is  possi- 
ble that  a  withdrawal  may  be  made  without  the  special  partner's 
knowledge.     This  would  occur  if  lands  were  purchased  with  part- 

aoi  See  post,  p.  4GS.    And  cf.  Beera  t.  Reynolds.  12  Barb.  (N.  Y.)  288. 

202  Bates,  Lim.  Paxtn.  f  83.  The  fact  that  part  of  the  required  capital  of  a  lim- 
lte<l  partnership  association  is  withdrawn  from  the  bank  where  It  has  been  de- 
posited before  the  organization  i.s  completed  does  not  impair  the  validity  of  the  or- 
ganization, unless  it  is  also  withdrawn  from  the  association.  Masters  t.  Lauder, 
131  Pa.  St.  195,  18  Atl.  872.  Where  a  special  partner,  at  the  end  of  the  period  for 
which  the  partnership  Ls  formed,  leaves  all  his  capital  and  all  the  assets  of  the  nrm 
in  the  hands  of  the  general  partners  on  their  agreement  to  pay  him  the  amoimt  of 
his  interest  in  the  firm,  wiiich  they  fail  to  do,  he  does  not  thereby  withdraw  his 
capital  from  the  firm,  within  the  meaning  of  1  Rev.  St.  p.  7GG,  §  15,  so  as  to  render 
him  liable  for  firm  debts.  George  v.  CariKUiter,  73  Hun,  2i:i,  25  N.  Y.  Supp.  1086. 
Where  the  special  partner  pays  in  onconditionally  the  sum  specified,  and  at  the 
same  time  the  certificate  is  duly  signed  and  sworn  to,  and  then  the  moneys  so  con- 
tributed are  paid  away  for  the  purposes  of  the  firm,  and  after  that,  on  the  same 
day,  the  certiti rate  is  duly  filed,  a  limited  co-partnership  is  legally  constituted,  if  the 
transaction  was  bona  fide,  and  it  was  not  necessary  that  the  contributed  capital 
should  be  in  hand  at  the  time  of  the  filing  of  the  certificate.  Vernon  v.  Brunson,  54 
N.  J.  Law,  580,  25  Atl.  511.  A  mere  expectation  that  the  capital  of  the  pai-tncr- 
■hip  would  be  employed  to  purchase  the  stock  of  an  immediately  preceding  firm  does 
not  deprive  the  former  of  its  character  as  a  limited  partnership;  for,  in  the  ab- 
sence of  an  actual  agreement  to  that  efifect  when  the  capital  was  contributed,  the 
partnership  would  be  at  liberty  to  use  its  cnpital,  when  It  was  received.  In  that  or 
any  other  direction.  Metropolitan  Nat,  Bank  v.  Palmer,  5(>  Hun,  041,  9  N.  Y. 
Supp.  239.  Upon  the  formation  of  a  limited  partnership  to  carry  on  a  business 
already  being  carried  on  by  one  of  the  partners,  an  agreement  that  the  money  paid 
in  by  the  limited  partner  shall  be  applied  in  payment  of  debts  due  for  stock  already 
on  hand  is  neither  against  public  policy,  nor  contrary  to  the  provisions  of  2  Starr  & 
C.  Ann.  SL  111,  c.  84,  relating  to  limited  partnerships.  Anderson  v.  Stone  24  III 
A  pp.  342. 

GEO.PART.— 30 


466  LIMITED    PARTNERSHIPS.  (Ch.    10 

hership  funds,  and  the  title  taken  in  the  name  of  the  special  part- 
ner jointly  with  the  others.^"^  If  the  special  partner  borrows  the 
money  which  he  contributes,  and  the  firm  subsequently  assumes  tliis 
debt,  the  transaction  constitutes  a  withdrawal.^"* 

Penalty  for    Withdrawal. 

In  most  states  the  only  penalty  provided  by  statute  for  diso- 
bedience of  the  provision  forbidding  withdrawals  is  the  return  of 
the  amount  withdrawn. *°°  This  is  obviously  the  only  consequence 
that  can  be  justly  imposed  where  the  withdrawal  was  unintentional 
and  in  good  faith.  But,  as  the  withdrawal  is  expressly  forbidden, 
it  seems  that  an  intentional  violation  of  the  statute  in  this  regard 
will  impose  liability  as  a  gi-neral  partner,  although  the  only  pen- 
alty- named  in  the  statute  is  the  restoration  of  the  amount  with- 

208  Madison  County  Bank  v,  Gould,  5  Hill  (N.  Y.)  309. 

204  Coffin's  Appeal,  106  Pa.  St.  280.  Cf.  Beer«  v.  Reynolds,  12  Barb.  (N.  Y.) 
288;  Lachaise  v.  Marks,  4  E.  D.  Smith  (N.  Y.)  610.  Nor  is  a  loan  made  by  the 
firm  to  the  special  partner,  conceded  to  be  such,  and  proved  to  have  been  repaid  with 
interest  a  violation  of  that  provision  of  the  statute  which  prohibit*  a  withdrawal. 
by  any  special  partner,  of  any  portion  of  the  sum  contributed  by  him  to  the  stock  of 
the  company.      Hogg  v.  Orgill,  34  Pa.  344. 

206  ALABAMA:  Code  188G,  §  1721.  ARKANSAS:  Sand.  &  H.  18&4,  fi  54G3. 
COLORADO:  Mills'  Auu.  St.  1S«J1,  §  3379.  DELAWARE:  Rev.  Code  1874. 
c.  «J4,  §  5.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  22.  FLOR- 
IDA' McClel.  Dig.  1881,  c.  159.  §  12.  GEORGIA:  Code  1882,  §  1935.  n.Ll- 
NOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  W,  8  18.  INDIANA:  Rev.  St.  1894,  § 
8116.  IOWA:  McCluin'b  Code  1888,  §  3315.  KANSAS:  Gen.  St.  1889,  par. 
3991.  KENTUCKY:  St.  1894,  c.  94,  §  3774.  MAINE:  Rev.  St.  1883,  c.  33, 
§  7.  MARYLAND:  Code  1888,  art  73,  §  14.  MASSACHUSETTS:  Pub 
St.  1882,  c.  75,  §  8.  MICHIGAN:  How.  Ann.  St.  1882,  §  2355.  MINNE 
SOTA:  Gen.  St.  1894,  §  2344.  MISSISSIPPI:  Code  1892.  §  2772.  MON 
TANA:  Comp.  St  1888,  div.  5,  §  1603.  NEBRASKA:  Cobbey's  Consol.  St 
1891,  §  3246.     NEVADA:      Gen.  St  1885,  §  4912.     NEW  JERSEY:    Gen.  St 

1895,  "Partnership,"  i  16.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4.  tit  1,  { 
16.  NORTH  CAROLINA:  Code  1883.  §  3103.  OHIO:  Rev.  St  1892,  §  3152. 
OREGON:  2  Hill's  Ann.  Laws  1892,  §  3854.  PENNSYLVANIA:  Pepper  & 
L.   Dig.   1894,    "Limited   Partnership,"    §  22.      RHODE   ISLAND:       Gen.   Laws 

1896.  c.  157.  §  9.  TENNESSEE:  Mill.  &  V.  Code  1884.  §  2414.  TEXAS. 
Rev.  St.  1895,  art  3598.  UTAH:  Comp.  Laws  1888.  §  2488.  VERMONT: 
St  1894,  §  4283.  VIRGINIA:  Code  1887,  §  2872.  WASHINGTON:  Gen. 
St  1891,  §  2923.  WEST  VIRGINIA:  Code  1891,  c.  100.  %  8.  WISCONSIN: 
Sanb.  &  B.  Ann.  St  1889,  S  1715. 


§§    211-212)  WITHDRAWAL    OF    PROFITS    OR    CAPFTAL.  467 

drawn.'"'  "The  receipt  by  the  special  partner  of  dividends  as  a 
device  to  withdraw  capital  will  render  him  liable  as  a  general  part- 
ner; but  dividends  may  be  paid  to  him  in  good  faith,  with  only  the 
effect  to  require  him  to  restore  in  case  the  capital  shall  thereby 
be  unintentionally  reduced.''  '°^  In  several  states  the  statutes  pro- 
vide that,  in  ease  of  a  withdrawal,  the  special  partner  shall  be  lia- 
ble as  a  general  one.'***  These  statutes  are  broad  enough  to  cover 
an  innocent  withdrawal. 

Remedy  for  WitMrawaL 

Very  few  of  the  statutes  provide  how  the  liability  of  the  special 
partner  to  return  amounts  ^\ithdrawn  is  to  be  enforced.  In  such 
cases  the  ordinary  principles  of  partnership  apply.  No  action  at 
law  can  be  maintained  between  the  partners  involving  a  partnership 
accounting.  The  return  can  be  enforced  only  by  a  bill  in  equity 
for  a  dissolution  and  an  accounting,  subject  to  usual  exceptions. 
Creditors  must  tirst  pursue  the  general  partners  to  insolvency  be 
fore  they  can  proceed  against  the  special  partner.^**"  But,  in  equity, 
the  special  partner  may  be  joined  with  the  general  partners,  and 
thus  forced  to  refund.^ ^° 

2o«  Madison  County  Bank  v.  Gould,  5  Hill  (N.  Y.)  309.  A  special  partner  who. 
in  violation  of  the  statutes,  withdraws  the  capital  contributed  by  him  or  any  profiln 
from  the  firm,  and  thereby  reduces  its  oritciiial  capital,  is  not  ouly  liable  to  be 
treated  as  a  general  partner,  but  may  also  be  compelled  to  account  in  a  proixr 
action  for  the  moneys  so  received,  as  being  held  by  him  as  a  trustee  for  the  benefit 
of  the  creditors  of  the  firm.      Bell  v.  Merrifitld.  28  Hun  (X.   Y.)  219. 

207  Lachaise  v.  Marks,  4  E.  D.  Smith  (N.  Y.)  GIG. 

•ios  CALIFOUMA:  Civ.  Code  1886,  §  2495.  DAKOTA:  Comp.  Laws  1887, 
§  4088.  IDAHO:  Rev.  St.  1887,  f  3285.  NEW  HAMPSHIRE:  Gen.  Laws 
1878.  c.  118.  §  7.  NORTH  DAKOTA:  Rev.  Code.  1895.  §  4432.  WYOMING: 
Rev.  St.  1887.  §  4084. 

209  Wilkins  v.  Davis,  2  Low.  511.  Fed.  Cas.  No.  17,l]tj4;  Bell  v.  Merrifield.  28 
Hon  (N.  Y.)  219. 

«io  \\  ilkiuB  V.  Davis,  2  Low.  511.  Fed.  Cus.  No.  17.664. 


468  LIMITED    PARTNERSHIPS.  (Ch.    10 


SAME— ALTERATION. 

213.  The  statutes  of  most  states  provide  that  any  altera- 
tion in  any  of  the  matters  stated  in  the  certificate 
shall  be  deemed  a  dissolution  of  the  partnership, 
and  that,  if  such  partnership  shall  be  carried  on 
after  such  alteration,  it  shall  be  deemed  a  general 
partnership. 

The  statutes  of  most  states  specificall}'  provide  that  any  alter- 
ation in  the  number  or  persons  of  the  partners  or  the  nature  of  the 
business,"^ ^  or  in  the  capital  or  shares  thereof,'^**  or  in  any  other 

211  ALABAMA:  Code  1886.  §  1717.  ARKANSAS:  Sand.  &  H.  Dig.  1894. 
§  5459.  CALIFORNIA:  Civ.  Code  1880,  §  2507.  DAKOTA:  Comp.  Laws 
1887,  §  4094.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  15. 
GEORGIA:  Code  1882,  §  1931.  IDAHO:  Rev.  St.  1887,  §  3291.  IOWA: 
McCIain'8  Code  1888,  §  3341.  KANSAS:  Gen.  SL  1889,  par.  3989.  KEN- 
TUCKY: St  1894,  c.  94,  §  3771.  MARYLAND:  Co<le  1888.  art.  73,  §  10. 
MICHIGAN:  How.  Ann.  St  1882,  §  2353.  MINNESOTA:  Gen.  St  1894,  § 
U.i41.  MISSISSIPPI:  Code  1892,  §  2776.  MISSOURI:  Rev.  St  1889,  §  7199. 
NEBRASKA:    Comp.  St   1893,  c.  G5,  i  12.     NEW   UAMPSIIIRK:    Pub.   St 

1891,  c.  122,  §  8.  NEW  JERSEY:  Gen.  St  1895,  "Partnership,"  §  12.  NEW 
VORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit  1,  §  12.  NORTH  CAROLINA:  Co<le 
1883,  §  3099.     NORTH  DAKOTA:    Rev.  Code  1895,  §  4438.     OHIO:    Rev.  St 

1892,  i  3149.  I'ENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partner- 
ship," §  14.  SOUTH  CAROLINA:  Rev.  St  1893,  §  1418.  TENNESSEE: 
Mill.  &  V.  Code  1884,  §  2410.  TEXAS:  Rev.  St  1895,  art.  3594.  UTAH: 
Comp.  Laws  1888,  §  2484.  VIRGINIA:  Code  1887,  §  2870.  WEST  VIR- 
(ilNIA:  Code  1891,  c.  100,  5  5.  WISCONSIN:  Saub.  &  B.  Ann.  St  1889,  § 
1712.     WYOMING:    Rev.  St  1887.  §  4090. 

212  ALABAMA:  Code  1886,  §  1717.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5459.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  15.  GEOR- 
(JIA:  Code  1882,  §  1931.  IOWA:  McClain's  Code  1888,  §  3341.  KANSAS: 
Gen-  St  1889,  par.  3989.  MARYLAND:  Code  1888,  art.  73,  §  10.  MICHI- 
GAN: How.  Ann.  St  1882,  §  2353.  MINNESOTA:  Gen.  St  1894,  §  234L 
NEBRASKA:  Comp.  St  1893,  c.  65,  §  12.  NEW  HAMPSHIRE:  Pub.  St 
1891,  c.  122,  §  8.  NEW  JERSEY:  Gen.  St  1895,  "Partnership,"  §  12.  NEW 
YORK:  Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1,  §  12.  NORTH  CAROLINA:  Code 
1883,  §  3099.  OHIO:  Rev.  St  1892,  §  4319.  PENNSYLVANIA:  Pepper 
&  L.  Dig.  1894,  "Limited  Partnership,"  §  14.     SOUTH  CAROLINA:    Rev.  St 

1893,  §  1418.     TEXAS:    Rev.  St  1895,  art.  3594.     UTAH:    Comp.  Laws  1888, 


§    213)  ALTERATION.  469 

matter  specified  in  the  original  certificate,**'  shall  be  deemed  a  dis- 
solution of  the  partnership,  and  that  any  partnership  curried  on 
after  such  alteration  shall  thereupon  become  general.'**  The  pro- 
viso "unless  it  be  duly  renewed  in  the  manner  originally  provided" 

§  24S4.  VIRGINIA:  Code  1887,  §  2870.  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  5.     WISCONSIN:    Sanb.  &  B.  Ann.  St.  18SU.  §  1712. 

«i«  ALABAMA:  Code  1886,  §  1717.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5459.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  15.  GEOR- 
GIA: Code  1SS2,  §  1931.  IOWA:  McClain's  Code  1888,  §  3341.  KANSAS: 
Gen.  St.  1889,  par.  3989.  MARYLAND:  Code  1888,  art.  73,  §  10.  MICHI- 
GAN: How.  Ann.  St  1SS2,  §  2353.  MINNESOTA:  Gen.  St.  1894,  §  2341. 
MISSISSIPPI:  Code  1892,  §  277(5.  NEBRASKA:  Comp.  St  1893,  c.  65.  §  12. 
NEW  HAMPSHIRE:  Pnb.  St.  1891,  c.  122,  §  8.  NEW  JERSEY:  Gen.  St 
1895,  "Partnership,"  8  12.  NORTH  CAROLINA:  Code  1883,  fi  3099.  OHIO: 
Rev.  St  1892,  §  3149.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited 
Partnership,"  §  14.  SOUTH  CAROLINA:  Rev.  St  1893,  §  1418.  TENNES- 
SEE: Mill.  &  V.  Code  1884,  §  2410.  TEXAS:  Rev.  St  1895,  art.  3594. 
UTAH:  Comp.  Laws  1888.  §  2484.  VIRGINIA:  Code  1887.  §  2870.  WEST 
VIRGINIA:  Code  1891,  c.  100,  §  5.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889, 
i  1712. 

214  ALABAMA:  Code  1886.  §  1717.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
S  5459.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  $  16.  GEOR- 
GIA: Code  1882.  §  1931.  IDAHO:  Rev.  St  1887,  §  3291.  IOWA:  Mc- 
Clain's Code,  1888.  §  3341.  KANSAS:  Gen.  St  1889,  par.  3989.  KEN- 
TUCKY: St  1894,  c.  94,  §  3771.  MARYLAND:  Code  1888,  art.  73, 
§  10.  MICHIGAN:  How.  Ann.  St  18S2.  §  2353.  MINNESOTA:  Gen. 
St  1894.  §  2341.  MISSISSIPPI:  Code  1892,  §  2776.  MISSOURI:  Rev. 
St  1889,  §  7199.  NEBRASKA:  Comp.  St  1893,  c.  65,  §  12.  NEW  HAMP- 
SHIRE: Pub.  St  1891,  c.  122,  §  8.  NEW  JERSEY:  Gen.  St  1895,  "Part- 
nership," §  12.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit  1,  g  12. 
NORTH  CAROLINA:  Code  1883,  §  3099.  OHIO:  Rev.  St.  1892,  §  4319. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  14. 
SOUTH  CAROLINA:  Rev.  St.  1893.  §  1418.  TENNESSEE:  Mill.  &  V. 
Code  188-1.  §  2410.  TEXAS:  Rev.  St.  1895.  art.  3594.  UTAH:  Comp.  Laws 
1888.  §  2484.  VIRGINIA:  Code  1887,  §  2869.  WEST  VIRGINIA:  Code 
1891,  c.  100,  §  5.  WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889.  §  1712.  WYOM- 
ING: Rev.  St.  1887.  §  4090.  An  alteration  in  the  names  of  the  partners,  and  in 
the  capital  or  shares  of  the  business,  in  contravention  of  the  twelfth  section  of  the 
act  authorizing  limited  partnerships,  o[>erates  simply  as  a  dissolution.  It  is  only 
by  carrying  on  the  business,  after  such  alteration,  that  the  firm  is  changed  into  a 
general  partnership,  and  the  special  partner  rendered  equally  liable  for  the  debts. 
Lachaise  v.  Marks,  4  E.  D.  Smith  (N,  Y.)  610. 


470  LIMITED    PARTNERSHIPS.  (Ch.    10 

is  added  in  the  statutes  of  some  states."'  The  statutes  of  a  num- 
ber of  states  do  not  specifically  forbid  such  alterations,  or  impose 
any  penalties  therefor.  Nevertheless,  it  would  seem  that  such  pro- 
hibition is  necessarily  implied  in  all  the  statutes,  as  to  permit  such 
alteration  would  defeat  their  whole  object.  The  making,  recording. 
and  publication  of  a  certificate  giving  notice  to  the  public  of  facts 
deemed  important  for  their  protection  would  be  futile  if  the  very 
next  day  all  the  facts  could  be  changed  by  private  agreement. 

What  Constitutes  Alteration. 

The  term  "alteration"  has  acquired  a  technical  significance  in 
this  connection,  and  is  used  as  a  convenient  term  to  express  a  change 
in  any  of  the  matters  required  to  be  specified  in  the  certificate,  as. 
for  example,  in  the  names  or  numbers  of  the  partners,  nature  of 
the  business,  the  capital,  etc."*  Bona  fide  loans  between  the  part- 
ners as  individuals  do  not  constitute  an  alteration,"^  nor  does  a 
loan  by  the  special  partner  to  the  fiim,'^'  though  upon  security  of 
the  firm  property.*"     The  purchase  of  claims  against  the  finn  is 

216  ALABAMA:  Code  1886.  S  1717.  ARKANSAS:  Sand.  &  n.  Dig.  1894. 
S  Mh'd.  DISTRICT  OF  COLUMBIA:  Comp.  St.  ISW.  c.  43,  \  16.  GEOR- 
GIA: Code  1882,  S  1031.  IOWA:  McClain's  Code  1888,  S  3341.  KANSAS: 
Gen.  St.  1889,  par.  3989.  MARYLAND:  Code  1888,  art.  73,  §  10.  MICHI- 
GAN: How.  Ann.  St.  1882,  §  2353.  MINNESOTA:  Gen.  St.  18SW,  §  2341. 
MISSISSIPPI:  Code  1S92,  §  2776.  NEBRASKA:  Comp.  St.  1893,  c.  6.5,  §  12. 
NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  12.  NORTH  CAROLINA: 
Code  1883.  §  3099.  OHIO:  Rev.  St.  1892,  §  3149.  i'ENNSYLVANIA:  Pep- 
per &  L.  Dig.  1894,  "Limited  Piirtnership."  §  14.  SOUTH  CAROLINA:  ReT. 
St.  1893,  §  1418.  TENNESSEE:  Mill.  &  V.  Code  18M,  §  2410.  VIRGINIA: 
Code  1887,  §  2870.  WEST  VIRGINIA:  Code  1891.  c.  100,  §  5.  WISCON- 
SIN: Sanb.  &  B.  Ann.  SL  1889,  §  1712.  WYOMING:  Rev.  St  1887,  §  4090. 
And  see  Idaho  Rev.  St.  1887,  §  3291. 

216  Bates,  Lim.  Partn.  §  83. 

2  17  Ilofrg  V.  Orgill,  34  Pa.  St.  344.  The  special  partner  is  not  rendered  per- 
sonally liable  for  the  debts  of  ilic  partnership  merely  because  loans  were  made  to 
the  preceding  firm,  and  by  the  latter  to  the  partnership  for  mutual  accommoda- 
tion, on  the  ground  that  these  transactions  constitute  a  change  in  the  business. 
Metropolitan  Nat.  Bank  v.  I'almer.  7:,^  Hun,  641.  9  N.  Y.  Supp.  2.39. 

218  In  re  Terry,  5  Biss.  110,  Fed.  Caa.  No.  13,830;  Walkenshaw  v.  Perzel,  32 
How.  Prac.  (N.  Y.)  233:  Vilas  Bank  v.  Bullock,  10  Phila.  309;  Rayne  v.  Terrell, 
33  La.  Ann.  812. 

si»  In  re  Terry,  6  Bisa.  110,  Fed.  Cas.  No.  13,836;    Madison  County  Bank  t. 


§    213)  ALTERATION.  471 

not  an  alteration."**  A  sale  by  one  partner  to  another  of  his  in- 
terest is  an  alteration,  and  renders  the  special  partner  thereafter 
liable  as  a  general  one;  **^  but  it  seems  that  the  property  passes, 
and  thereby  deprives  creditors  of  the  limited  partnership  of  their 
priority  over  creditors  of  the  continuing  partner.*^'  If,  at  the  ex- 
piration of  the  term  of  a  limited  partnership,  it  is  attempted  to 
renew  it,  but  with  a  change  in  the  membership,  the  firm  formed  is 
not  a  renewal  of  the  former  limited  partnership,  but  the  formation 
of  a  new  one;  for  the  change  in  membership  is  an  alteration,  and 
works  a  dissolution.  If,  therefore,  the  statutory  requirements  for 
the  creation  of  an  original  limited  partnership,  such  as  the  actual 
payment  in  cash  of  the  special  partner's  contribution,  are  not  com- 
plied with,  all  the  partners  are  generally  liable,*" 
Special  Paring  must  Participate  in  Alteration, 

In  Singer  v.  Kelly  "*  it  was  held  that,  under  the  limited  partner- 
ship law,  a  special  partner  cannot  be  personally  involved,  einept 
by  his  own  acts  and  violation  or  omission  of  duty,  or  by  assenting 
to  those  of  liis  co-|»artner8  when  he  knows  or  is  presumed  to  know 
them;  and  hence  an  alteration  by  the  general  partners  in  the 
nature  of  the  business  provided  for  in  the  certificate  of  co-partner- 
ship, without  the  knowledge  of  the  special  partner,  does  not  make 

Gould,   5  Hill   (N.  Y.)  SO');    Walkenshaw  v.   Perzel,  32  How.   Prac.  (N.  Y.)  233; 
Lewis  V.  Graham,  4  Abb.  Prac.  (N.  Y.)  100. 

220  Haye«  ▼.  Heyer,  3">  N.  Y.  326. 

221  Beers  t.  Reynolds,  11  N.  Y".  D7.  Where  a  third  person  enters  the  firm  as  » 
general  partner,  the  sjiecial  partnership  is  dissolved;  and  if  there  be  a  renewal,  and 
not  a  cash  payment  by  the  former  and  tontinuing  special  partner,  but  the  cash  paid 
into  the  former  special  partnership  remains  with  the  new  firm,  the  special  partner 
becomes  a  Kcueral  partner  of  the  new  firm.  In  such  cases,  knowledge  by  creditors 
of  the  existence  of  the  special  partnership  agreement,  at  the  time  the  contracts 
are  made,  does  not  discharge  the  special  partner  from  his  general  liability.  An- 
drews V.  Schott,  10  Pa.  St.  47;    Guillon  v.  Peterson,  89  Pa.  St.  163. 

222  First  Nat.  Bank  t.  Whitney,  4  Lans.  (N.  Y.)  34;  Mattison  t.  Demarest,  4 
Rob.  (N.  Y)  161;   Upson  v.  Arnold,  19  Ga.  190. 

««»  Andrews  v.  Schott,  10  Pa.  St.  47;  Lineweaver  ▼.  Slagle,  64  Md.  465,  2  AtL 
693. 

2«4  44  Pa.  St.  145.  Where  the  general  partner  misappropriates  the  contribution 
of  a  special  partner,  the  latter  is  not  liable  as  a  general  partner  for  the  debts  of 
the  partnership,  where  he  is  not  privy  to  the  misappropriation.  Seibert  v.  Bake- 
weU,  87  Pa.  St.  506. 


472  LIMITED    PARTNERSHIPS.  (Ch.    10 

him  a  general  partner,  so  as  to  render  him  personally  liable  to  the 
creditors  of  the  firm.  The  court  said  that  knowledge  or  assent  of 
the  party  to  be  charged  by  the  acts  done  was  an  implied  condition 
of  liability.  Bates  supports  this  decision  upon  the  ground  that  an 
attempted  change  in  the  nature  of  the  business  without  the  special 
partner's  consent  would  be  wholly  void,  as  beyond  the  scope  of  the 
general  partner's  powers,  and  therefore  no  real  change.^ ^' 

Consequeyices  not  Retroactive, 

General  liability  as  a  penalty  for  an  alteration  does  not  attach 
retroactively.  The  alteration  effects  a  dissolution  of  the  limited 
partnership.  If  the  business  is  thereafter  carried  on,  all  the  part- 
ners are  liable  as  to  such  transactions  in  solido.^^'  But,  if  the  al- 
teration also  constitutes  an  interference,  the  special  partner,  as  will 
be  seen,  is  liable  generally  for  both  prior  and  subsequent  transac- 
tions.*'* 

SAME— INTERFERENCE. 

214.  The  partnership  business  must  be  transacted  by  the 
general  partners  alone,  and,  if  the  special  partner 
interferes  in  the  management,  he  becomes  liable  as 
a  general  partner. 

The  limited  partnership  acts  are  unanimous  in  excluding  the  spe- 
cial partner  from  any  part  in  the  management  of  the  firm  affairs. 
The  prohibition  is  variously  expressed.  In  most  states  the  stat- 
utes provide  that  the  general  partners,  only,  shall  be  authorized  to 
transact  business  for  the  paitnerships.^**     Some  statutes  say  that 

22B  Bates,  Partn.  §  99;  Taylor  v.  Rasch,  1  Flip.  385,  Fed.  Cas.  No.  13,800. 

226  Singer  v.  Kelly,  44  Ta.  St.  145;  Lachaise  v.  Marks,  4  E.  D.  Smith  (N.  Y.) 
610;    Perth  Amboy  Manuf'g  Co.  v.  Coudit,  21  N.  J.  Law,  G59. 

187  First  Nat.  Bank  v.  Whitney,  4  Lans.  (N.  Y.)  34.    And  see  post,  p.  474. 

228  ALABAMA:  Code  1886,  §  1707.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5464.  CALIFORNIA:  Civ.  Code  1886,  §  2489.  COLORADO:  Mills'  Ann. 
St.  1891,  §  3371.  DAKOTA:  Comp.  Laws  1887,  §  4082.  DISTRICT  OF  CO- 
LUMBIA: Comp.  St.  1894,  c.  43,  §  20.  FLORIDA:  McClel.  Dig.  1881,  c. 
159,  §  13.  GEORGIA:  Code  1882,  §  1922.  IDAHO:  Rev.  St  1887,  §  3279. 
ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  §  3.  INDIANA:  Rev.  St.  1894, 
I  8115.  IOWA:  McClain's  Code  1SS8.  §  3332.  KANSAS:  Gen.  St.  1889,  par. 
8992.     KENTUCKY:    St.    1894,    c    94,    §   3768.     MAINE:    Rev.    St    1883,   c 


§    214)  INTERFERENCE.  473 

the  special  partner  shall  not  be  authorized  to  sign  for  the  partner- 
ship, or  to  bind  it.^'®  In  many  states  the  statutes  provide  that  the 
special  partner  cannot  be  employed  to  transact  firm  business  as  at- 
torney, agent,  or  otherwise.''^'*  Under  most  statutes  a  special  part- 
ner interfering  contrary  to  their  provisions  is  deemed  a  general  part- 

33,  §  6.  MARYLAND:  Code  1S88,  art.  73,  §  12.  MICHIGAN:  How.  Ann. 
St.  1882,  §  2343.    MINNESOTA:    Gen.  St.  1894,  §  2332.    MISSISSIPPI:    Code 

1892,  §  2771.     MISSOURI:    Rev.  St.  1889,  §  7201.     NEBRASKA:    Comp.  St 

1893,  c.  G5,  §  3.  NEVADA:  Gen.  St.  1885,  §  4911.  NEW  HAMPSHIRE: 
Pub.  St.  1891,  c.  122,  §  6.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  3. 
NEW  YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  3.  NORTH  CAROLINA: 
Code  1883,  §  3104.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4426.  OHIO: 
Rev.  St.  1892,  i  3153.  PENNSYLVANIA:  I'epper  &  L.  Dig.  1894,  "Limited 
Partnership,"  §  4.  RHODE  ISLAND:  Gen.  St.  Laws  1896,  c.  157,  §  8. 
SOUTH  CAROLINA:  Rev.  St.  1893.  §  1409.  TENNESSEE:  Mill.  &  V.  Code 
1884,  §  2400.  TEXAS:  Rev.  St.  1895,  art  3585.  UTAH:  Comp.  Laws  1888. 
I  2475.  VIRGINIA:  Code  1887,  §  287L  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  7.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  §  1716.  WYOMING: 
Rev.  St  1887,  §  4078. 

220  ALABAMA:  Code  1886,  §  1707.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5449.  COLORADO:  Mills'  Ann.  St  1891,  §  3371.  GEORGIA:  Code  1882, 
§  1922.  ILLINOIS:  2  Starr  &  C.  Ann.  St  1896,  c.  84,  §  3.  IOWA:  Mc- 
Clain's  Code  1888.  §  3332.  KANSAS:  Gen.  St.  1889,  pars.  3979,  3992.  KEN- 
TUCKY: St.  1894,  c.  94,  §  3773.  MICHIGAN:  How.  Ann.  St  1882,  §  2:54:;. 
MINNESOTA:  Gen.  St  1894,  §  2332.  MISSISSIPPI:  Code  1892,  §  2771. 
NEBRASKA:  Comp.  St.  1893,  c.  65,  §  3.  NEW  JERSEY:  Gen.  St  1895, 
"Partnership,"  §§  3,  25.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit.  1,  §  3. 
PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership."  §  23. 
SOUTH  CAROLINA:  Rev.  St  1893,  §  1409.  TENNESSEE:  Mill.  &  V. 
Code  1884,  §  2400.     TEXAS:    Rev.  St  1895,  art.  3585.     UTAH:    Comp.  Laws 

1888.  §  2475.  WISCONSIN:  Sanb.  &  B.  Ann.  St  18S9,  §  1716.  See  Columbia 
Land  &  Cattle  Co.  v.  Daly,  46  Kan.  504,  26  Pac.  1042. 

280  ALABAMA:  Code  1886,  §  1722.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
I  5464.  GEORGIA:  Code  1882,  §  1936.  ILLINOIS:  2  Starr  &  C.  Ann.  St. 
1896,  c.  84.  §  19.     IOWA:    McClain'a  Code  1888,  §  3346.     KANSAS:    Gen.  St. 

1889,  par.  3992.  KENTUCKY:  St  1894,  c.  94,  §  3773.  MINNESOTA:  Gen. 
St  1894,  §  2345.  MISSISSIPPI:  Code  1892,  §  2773.  MISSOURI:  Rev.  St 
1889,  §  7201.  NEBRASKA:  Comp.  St.  1893,  c.  65,  §  17.  NEW  JERSEY: 
Gen.  St  1895,  "Partnership,"  §  17.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2,  c. 
4,  tit.  1,  I  17.  NORTH  CAROLINA:  Code  1883,  $  3104.  OHIO:  Rev.  St 
1892,  I  3153.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partaer- 
•hlp,"  23.  SOUTH  CAROLINA:  Rev.  St  1893,  §  1421.  TENNESSEE. 
Mill.  &  V.  Code  1884,  S  2416.    WISCONSIN:    Sanb.  &  B.  Ann.  St.  1889,  §  17ia 


474  LIMITED    PARTNERSHIPS.  (Ch.    10 

ner.'^^  In  several  states  it  is  provided  that,  if  a  special  partner 
make  any  contract  respecting  partnership  concerns  with  any  pei-sons 
except  general  partners,  he  shall  be  deemed  a  general  partner,"* 

231  ALABAMA:  Code  1886,  §  1722.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5464.  COLORADO:  Mills'  Ann.  St.  1891,  §  33(8.  DAKOTA:  Comp.  Laws 
1887,  i  4092.  DISTRICT  OF  COLUMBIA:  Comp.  St,  1894,  c.  43.  §  20. 
FLORIDA:  McClel.  Dig.  1881,  c.  109.  §  lo.  GEOR(nA:  Code  1SS2.  §  1936. 
IDAHO:  Rev.  St.  1887,  §  3289.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c. 
84,  §  19.  INDIANA:  Rev.  St,  1894,  §  8115.  IOWA:  McClain's  Code  1888, 
§  3346.  KANSAS:  Gen.  St.  1889,  par.  :;'J92.  KENTUCKY:  St.  1S04,  c.  W. 
§  3773.  MARYLAND:  Rev.  Code  1888,  art  73,  §  12.  MINNESOTA:  Gen. 
St.  1894,  §  2345.  MISSISSIPPI:  Code  1892,  §  2773.  MISSOURI:  Rev.  St. 
1889,  §  7201.  NEBRASKA:  Comp.  St.  1893,  c.  65,  §  17.  NEVADA:  Gen. 
St.  1885,  S  4911.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  25.  NEW 
YORK:  Rev.  St.  (9th  Ed.)  pt.  2,  c.  4,  tit.  1,  §  17.  NORTH  CAROLINA:  Code 
1883i  8  3104.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4436.  OHIO:  Rev.  St. 
1892,  §  3153.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894.  "Limited  Partner 
ship,"  §  23.  SOUTH  CAROLINA:  Rev.  SL  1893,  S  H21.  TENNESSEE: 
Mill.  &  V.  Code  1884.  5  2415.  TEXAS:  Rev.  St,  1895.  art.  3595.  UTAH: 
Comp.  LawB  188S,  §  2491.  VIRGINIA:  Code  1887.  §  2871.  WEST  VIR 
(ilNIA:  Code  1891,  c.  100.  §  7.  WISCONSIN:  Saub.  &  B.  Ann.  St,  1S8'.>. 
S  1716.  WYOMING:  Rev.  St.  1887,  §  4088.  As  to  what  acts  amount 
to  interference,  s<'e  I»:ivis  v.  Howes.  15  U.  C.  Q.  B.  280;  Madison  County 
Bank  v.  Gould,  5  Hill  (N.  Y.)  309.  The  stjUute  does  not  prevent  a  limltt'<l 
partner,  if  he  is  willing  to  assume  the  liabilities  that  follow  from  acting  as 
general  partner,  unless,  by  the  articles  of  co-partnership,  he  is  excluded  from  a 
control  as  a  general  partner;  and  this  nstriction  may  cease  at  the  expiration  of  tlio 
partnership.  Hogg  v.  Ellis,  8  How.  Prac.  (N.  Y.)  473.  A  special  partner  in  :i 
firm,  who  is  a  party  to  a  transfer  of  all  the  assets  of  his  firm  to  one  creditor  for 
the  benefit  of  the  creditors  of  the  firm,  becomes  liable  to  such  cri'ditors  as  a  general 
partner.  Farnsworth  v.  Boardinan,  131  Mass.  115.  If,  during  the  existence  of 
a  limited  partnership,  the  special  partner  buys  out  the  entire  firm  property,  and 
continues  the  business  in  his  own  name,  for  his  own  account,  he  interferes  with 
(he  firm  bu.siness,  contrary  to  the  provisions  of  section  17  of  the  act  relating  to 
limited  partnerships  (1  Rev.  St,  p.  760),  and  renders  himself  liable  as  a  general 
partner.  First  Nat.  Bank  of  Canandaigua  v.  Wliitney,  4  Lans.  (N.  Y.)  34.  An 
action  brought  by  a  special  partner  against  his  general  partners  in  the  interest  of 
the  firm  creditors,  and  for  the  preservation  of  the  partnership  trust  funds,  in  which 
the  special  partner  is  appointed  receiver,  is  not  such  an  interference  with  the  busi- 
ness as  will  make  him  liable  as  a  general  partner.  17  N.  Y.  Supp.  188,  affirmed 
Continental  Nat.  Bank  of  Boston  v.  Strauss,  137  N.  Y.  148,  553,  32  N.  E.  1066. 

232  DELAWARE:    Rev.  Code  1874,  c.  64,  §  4.     INDIANA:    Rev.  St.  1894, 
S  8115.      MICHIGAN:     How.  Ann.  St.  1882,   §  2354.      MONTANA:    Civ.   Code 


§214)  INTERFERENCE.  475 

but  in  other  states  it  is  provided  that  he  shall  be  deemed  a  general 
partner  only  as  to  such  contract.*"  In  Vermont  ^^*  he  is  not  so  lia- 
ble if  he  notify  the  other  party  that  he  is  acting  only  as  a  special 
partner;  nor  in  Oregon  ^^^  and  Washington,"^  if  he  acted  and  was 
recognized  as  such.  A  few  statutes  provide  that  a  special  partner 
who  has  unintentionally  done  any  act  contrary  to  the  provisions  of 
the  statute  shall  be  liable  as  a  general  partner  to  any  creditor  of  the 
firm  who  has  been  actually  misled  thereby  to  his  prejudice.''^ 

The  following  exceptions  to  the  rule  prohibiting  any  interference 
in  the  partnership  alTairs  by  the  special  partner  are  each  created  by 
the  statutes  of  one  or  more  states:  He  may  in  most  states,  from 
time  to  time,  examine  the  concern  and  advise  as  to  its  manage- 
ment,*" though  no  consequence  follows  the  neglect  of  his  advice, 

1895,  §  3343.  NEVADA:  Gen.  St.  ISS:.,  §  4911.  NEW  HAMrSHIRE:  Pub. 
St.  1891,  c,  122,  §  (J.  RHODE  ISLAND:  Gen.  Laws  1S90,  c.  157,  §  8.  VIR- 
GINIA: Code  1S87,  §  2871.  WEST  VIRGINIA:  Code  1891,  c  100,  {  7.  See 
Howes  T.  Holland,  14  U.  C.  Q.  B.  310. 

233  MAINE:  Rev.  St.  1883,  c.  33,  §  6.  ORE(JON:  2  Hill's  Ann.  Law.s  1892. 
§  3853.  VERMONT:  St.  189-1,  i  42S2.  WASUlNCiTON:  Gen.  St.  1891,  | 
2922. 

a«*  St.  1894,  S  4282. 

286  2  Hill's  Ann.  Laws  1892.  §  3853. 

230  Gen.  St.  1891,  §  2922. 

237  CALIFORNIA:  Civ.  Code  1886,  §  2502.  DAKOTA:  Comp.  Laws  1887, 
§  4092.  IDAHO:  Rev.  St.  1887,  §  3289.  NORTH  DAKOTA:  Rev.  Co<le 
1895,  §  4430.     WYOMING:    Rev.  St.  1887,  §  4088. 

««8  ALABAMA:  Code  1886,  §  1722.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  ii 
5464.  CALIFORNIA:  Civ.  Code  1886,  §  249U.  DAKOTA:  Comp.  Laws  1887, 
§  4083.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  20.  FLOR 
IDA:  McClel.  Dig.  1881,  c.  159,  §  13.  GEORGIA:  Code  1882,  §  1936.  IDA- 
HO: Rev.  St.  1887,  §  3280.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84, 
§  19.  IOWA:  McClain's  Code  1888,  §  3346.  KANSAS:  Gen.  St.  1889,  par 
3992.  KENTUCKY:  St.  18»4.  c.  94,  §  3773.  MARYLAND:  Code  1888,  art 
73,  S  12.  MICHIGAN:  How.  Ann.  St.  1882,  §  2304.  MINNESOTA:  Gen 
St.  1894,  §  2345.  MISSISSIPPI:  Code  1892,  §  2773.  MISSOURI:  Rev.  St 
1SS9,  §  7201.  NEBRASKA:  Comp.  St  1893,  c.  65,  S  17.  NEW  JERSEY 
Gen.  St.  1S95,  "Partnership."  S  17.  NEW  YORK:  Rev.  St.  (9tb  Ed.)  pt.  2,  c 
4,  Ut.  1,  §  17.  NORTH  CAROLINA:  Code  1883,  §  3104.  NORTH  DAKO 
TA:  Rev.  Code  1895,  §  4427.  OHIO:  Rev.  St.  1892,  §  3153.  PENNSYL 
VANIA:  Popper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  23.  SOUTH  CARO 
LINA:  Rev.  St.  1893,  §  1421.  TENNESSEE:  MUl.  &  V.  Code  1884,  §  2415 
TEXAS:     Rev.  St.  1895,  art  3599.      UTAH:    Comp.  Laws  1888,  §  2489.      VIR 


476  LIMITED    PARTNERSHIPS,  (Ch.    10 

and  he  has  no  power  to  vote."*  He  may  sometimes  act  as  an  at- 
torney at  law.'^*"  He  may  be  constituted  agent  by  the  general 
partners  for  negotiating  sales,  purchases,  and  transacting  other 
business,  upon  disclosing  his  agency  to  the  other  party.'**  In  sev- 
eral states  he  may  act  as  attorney  in  fact  under  a  power.^*-  In 
Illinois  ^*'  and  Tennessee  ***  it  seems  he  may  transact  any  business 
with  the  express  assent  of  all  the  general  partners.  In  a  number  of 
states  he  may  loan  or  advance  money  to  the  partnership,  pay  money 
for  it,  take  and  hold  the  notes,  drafts,  bonds,  and  acceptances  of  it 
as  security  therefor,  use  and  lend  his  name  and  credit  as  security 
for  the  partnership  in  any  business  thereof,  and  have  the  same 
rights  and  remedies  in  this  respect  as  any  other  creditor  would 
have.**'     He  may  lease  lands,  etc.,  to  the  general  partners  for  part- 

GINIA:  Code  1887,  §  2871.  WEST  VIRGINIA:  Code  1891,  c.  100.  §  7. 
WISCONSIN:  Sanb.  &  B.  Ann.  St  1889.  §  1716.  WYOMING:  Rev.  St  1887. 
§  4079.     Cf.  Ulman  v.  Bripgs.  32  La.  Ann.  655.  657.  per  Bcrmudez.  C.  J. 

280  Bates,  Lim.  Partn.  i  111. 

a*o  ALABAMA:  Code  1886,  §  1722.  GEORGIA:  Code  1882,  §  1936.  MIS 
SISSIPPI:  Code  1892,  §  2773.  NORTH  CAROLINA:  Code  1883,  i  3104. 
SOUTH  CAROLINA:    Rev.  St.  1893,  (  1421. 

241  OHIO:    Rev.  St.  1892,  §  3153. 

242  FLORIDA:  McCIcl.  Dig.  1881,  c.  l.'')9,  §  13.  ILLINOIS:  2  Starr  &  C. 
Ann.  St.  1896,  c.  84,  §  19.     TENNESSEE:    Mill.  &  V.  Code  1884,  S  2415. 

248  2  Starr  &  C.  Ann.  St.  1896,  c.  M,  §  19. 

244  Mill.  &  V.  Code  1884,  §  2415. 

248  CALIFORNIA:  Civ.  Code  1886,  §  2491.  DAKOTA:  Comp.  Laws  1887, 
§  4084.  IDAHO:  Rev.  St  1887,  §  3281.  MICHIGAN:  How.  Ann.  St  1882, 
§  2364.  MINNESOTA:  Gen.  St  1894,  §  2:i45.  NEW  JERSEY:  Gen.  St 
1895,  "Partnership,"  §  25.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1, 
§  17.  NORTH  DAKOTA:  Rev.  Code  1895,  §  4428.  WYOMING:  Rev.  St. 
1887,  §  4080.  But  in  case  of  the  insolvency  of  a  partnenship  no  special  partner 
shall  be  allowed  to  claim  as  a  creditor  until  the  claims  of  all  others  are  satisfied. 
ALABAMA:  Code  1886,  §  1728.  ARKANSAS:  Sand.  &  H.  Dig.  1894,  §  5470. 
CALIFORNIA:  Civ.  Code  1S,S6,  §  2491.  DAKOTA:  Comp.  Laws  1887,  § 
4084.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894.  c.  43.  §  25.  FLORIDA: 
McClel.  Dig.  1881.  c.  159.  §  18.  GEORGIA:  Code  1882,  §  1942.  IDAHO: 
Rev.  St  1887,  §  3281.  ILLINOIS:  2  Starr  &  C.  Ann.  St  1896.  c.  84,  §  23, 
IOWA:  McClain's  Code  1888.  §  3352.  KENTUCKY:  St  1894.  c  94,  §  3775. 
MARYLAND:  Code  1888,  art.  73.  §  18.  MINNESOTA:  Gen.  St  1894,  § 
2349.  MISSISSIPPI:  Code  1892.  §  2781.  MISSOURI:  Rev.  St  1889,  §  7203. 
NEBRASKA:  Comp.  St  1893,  c.  65,  §  23.  NEW  HAMPSHIRE-  Pub.  St 
1891,  c  122,  8  12.    NEW  JERSEY:    Gen.  St  1895,  "Partnership,"  §  23.    NEW 


§§  215-216^  INSOLVENCY.  477 

nership  purposes.'**  He  may  negotiate  sales,  purchases,  and  other 
business  for  the  partnership,  but  such  shall  not  be  binding  upon  it 
until  approved  by  a  general  partner,'*^ 


SAME— INSOLVENCY. 

216.  The  rights  of  the  parties  in  case  of  insolvency  of  the 
firm  will  be  considered  under  the  following  heads: 

(a)  Fraudulent  conveyances  (p.  478). 

(b)  Property  a  trust  fund  for  creditors  (p.  480). 

(c)  Assignments  for  benefit  of  creditors  (p.  183). 

(d)  The  special  partner  as  a  creditor  (p.   484). 

216.  A  limited  partnership   is   insolvent  when  it  has  not 
sufficient  property  and  effects  to  pay  all  its  debts. 

The  term  "insolvency,"  as  used  in  the  limited  partnership  acts, 
was  defined  as  above  in  the  case  of  McArthur  v.  Chase.'**  The 
court  said:  "To  declare  that  open  and  notorious  bankruptcy  is  the 
true  and  only  tost  of  insolvency  would,  as  was  argued  by  the  counsel 
for  the  appellees,  defeat  in  most  cases  tlie  design  of  the  law,  inas- 
much as  the  desire  of  a  firm  in  failing  circumstances  to  sustain  itself, 
as  also  to  prefer  its  special  friends,  would  generally  result  in  sales 
and  assignments  of  most  of  its  proj)erty,  made  to  insure  those  ends, 
before  such  bankruptcy  would  occur.  To  say,  on  the  other  hand, 
that  the  firm  should  be  held  to  be  insolvent  whenever,  from  any 
cause,  it  may  fail  to  meet  its  engagements  in  the  usual  course  of 

YORK:  Rev.  St.  (9th  Ed.)  pt.  2.  c.  4,  Ut.  1,  f  2:1  NORTH  CAROLINA:  Code 
1883,  §  3107.  NORTH  DAKOTA:  lU-v.  Code,  1895,  §  4428.  OHIO:  Rev. 
St.  1892,  S  3158.  PENNSYLVANIA:  Pepper  &  L.  Dig,  1894,  "Limited  Part- 
nership," §  29.  RHODE  ISLAND:  Gen.  Laws  1896,  c  157,  §  11.  SOUTH 
CAROLINA:  Rev.  St.  1893,  §  1427.  TENNESSEE:  Mill.  &  V.  Code  1884, 
§  2420.  TEXAS:  Rev.  St.  1895,  art.  3GU4.  UTAH:  Conip.  Lawe  1888,  §  2492. 
VIRGINIA:  Code  1887,  §  2873.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  9. 
WISCONSIN:  Sanb.  &  B.  Ann.  St.  1889,  §  1722.  WYOMING:  Rev.  St.  1887, 
§  4080.     And  see  CONNECTICUT:    Gen.  St.  1888,  §  3283. 

24 e  NEW  YORK:    Laws  1872,  c.  114. 

«*T  MINNESOTA:  Gen.  St.  1894,  §  2345.  NEW  JERSEY:  Gen.  St.  1895, 
"Partnership,"  §  25.     NEW  Y'ORK:    Rev.  St  (9th  Ed.)  pt.  2,  c.  4,  tit  1,  i  17. 

2*8  13  Grat  (Va.)  683.     And  see  Levy  v.  Ley,  6  Abb.  Prac.  (N.  Y.)  89. 


478  LIMITED    PARTNERSHIPS.  (Ch.    lO 

business,  would  seem  to  be  harsh,  and  might  tend  greatly  to  dis- 
courage the  formation  of  such  partnerships.  In  a  country  like  ours, 
where  so  much  of  its  commercial  business  and  trading  enterprises 
are  based  on  borrowed  capital,  and  where  sudden  and  unexpected 
expansions  and  contractions  of  the  currency  are  matters  of  frequent 
occurrence,  it  may  often  happen  that  the  most  prudent  firm,  by  the 
unexpected  failure  of  some  of  its  debtors  to  meet  their  payments,  or 
other  like  causes,  may  find  itself  unprovided  with  available  means 
to  meet  its  own  bills  and  notes  as  they  mature,  though  possessed  of 
assets  amply  sufficient  to  satisfy,  ultimately,  all  its  debts  and  lia- 
bilities. A  law  declaring  it  incompetent  in  a  ijartncrship  so  situated 
to  discharge  its  more  pressing  engagements  by  sales  or  assignments 
of  portions  of  its  property  and  credits  to  certain  creditors,  to  pay 
or  secure  their  demands,  might,  and  most  probably  would,  often  oc- 
casion the  stoi)pag<'  and  winding  u])  of  such  concerns  at  times  when 
the  safety  of  the  creditors  would  demand  no  such  sacrifice."  So,  in 
Walkenshaw  v.  Perzel,^*®  it  was  said:  "It  is  true  that  insolvency 
and  inability  to  pay  are  synonymous;  but  solvency  does  not  mean 
ability  to  pay  at  all  times,  under  all  circumstances,  and  everywhere, 
on  demand,  nor  does  it  require  that  a  person  shall  have  in  his  pos- 
session the  amount  of  money  necessary  to  pay  all  claims  against 
him.  Difficulty  in  paying  particular  demands  is  not  insolvency." 
In  Herrick  v.  I*orst,^'*°  the  temi  "solvent"  was  said  to  mean  one  who 
has  his  property  in  such  a  situation  that  all  his  debts  may  be  col- 
lected out  of  it  by  legal  process. 

217.  FRAUDULENT    CONVEYANCES  —  The    statutes    of 

most  states  prohibit  the  transfer  of  property  of  the 
firm,  or  of  the  general  or  special  partners,  in  con- 
templation of  insolvency  of  such  firm  or  partner, 
with  intent  to  create  a  preference  over  other  cred- 
itors of  the  firm. 

218.  If  a  special  partner  concurs  in  a  violation  of  the  above 

prohibition,  he  is  liable  as  a   general  partner. 

The  statutes  of  most  states  contain  provisions  intended  to  secure 
equality  between  the  creditors  of  the  firm  in  case  of  insolvency. 

24»  32  How.  Prac.  (N.  Y.)  233,  240.  2  60  4  HUl  (N.  Y.)  650. 


§§  217-218)  FRAUDULENT  CONVEYANCES.  479 

These  provisions  are  substantially  as  follows:  Every  sale,  assign- 
ment, or  transfer  of  any  of  the  property  or  effects  of  such  limited 
partnership,  made  by  it  when  insolvent  or  in  contemplation  of  in- 
solvency, or  after  or  in  contemplation  of  the  insolvency  of  any 
partner,  with  the  intent  of  giving  a  preference  to  any  creditor  of 
such  partnership  or  of  such  insolvent  partner  over  other  creditors 
of  such  partnership,  and  every  judgment  confessed,  lien  given,  or 
security  given  by  such  partnership  under  like  circumstances  and 
with  like  intent,  is  void  as  against  the  creditors  of  such  partner- 
ship.**^ So,  every  sale,  etc.,  of  the  property,  etc.,  of  a  general  or 
special  (except  in  Florida  *"**  and  District  of  Columbia  "*^)  partner 
in  like  circumstances,  made  with  intent  of  giving  any  creditor  of 
his  own  or  of  the  partnership  such  preference,  or  any  jud<i:ment  con- 
fessed, lien  created,  or  security  so  given,  is  void  as  above.""*      Any 

261  ALABAMA:  Code  1886,  §  1725.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5467.  CALIFORNIA:  Civ.  Code  1886,  §  2496.  DAKOTA:  Comp.  Laws 
1887,  §  4089.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  23. 
FLORIDA:  McClel.  Dig.  1881,  c.  159,  f  16.  GEORGIA:  Code  1882,  §  1939. 
IDAHO:  ReT.  St.  1887,  §  3286.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c. 
84,  §  22.  IOWA:  McClain's  Code  1S88,  §  3349.  KENTUCKY:  St.  1894,  c. 
94,  §  3776.  MARYLAND:  Code  1888,  art.  73,  §  15.  MINNESOTA:  Gen.  St 
1894,  S  2346.  MISSOURI:  ReT.  St.  1889,  §  7204.  NEBRASKA:  Comp.  St. 
1893,  c.  65,  §  20.  NEW  JERSEY:  Gen.  St  1895,  "Partnership,"  §  20.  NEW 
YORK:  Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1,  §  20.  NORTH  DAKOTA:  Rev. 
Code  1895,  §  4433.  OHIO:  Rev.  St  1892,  §  3156.  PENNSYLVANIA:  Pep- 
|.er  &  L.  Dig.  1894,  "Limited  Partnership,"  26.  SOUTH  CAROLINA:  Rev. 
St.  1893,  §  1424.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2418.  TEXAS: 
Rev.  St.  1895,  art  3601.  VIRGINIA:  Code  1887,  §  2874.  WEST  VIRGINIA: 
Code  1891,  c.  ItX),  §  10.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  i  1719. 
WYOMING:    Rev.   St  1887,   §  4085. 

262  McClel.  Dig.   1881,  c.  159,  §  16. 

3»«  Comp.  St  1894,  c.  43,  §  23.  ' 

254  ALABAMA:  Code  1886,  §  1726.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§5468.  CALIFORNIA:  Civ.  Code  1886,  §  2496.  DAKOTA:  Comp.  Laws  1887, 
§  4089.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  23.  FLOR- 
IDA: McClel.  Dig.  1881,  c.  159,  §  16.  GEORGIA:  Code  1882,  §  1940.  IDA- 
HO:  Rev.  St  1887,  §  3286.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c.  84,  { 
22.  IOWA:  Code  1888,  §  3350.  KENTUCKY:  St  1894,  c.  94,  §  3776. 
MARYLAND:  Code  1888,  art  73,  S  16.  MINNESOTA:  Gen.  St  1894,  §  2347. 
MISSOURI:  Rev.  St  1889,  §  7204.  NEBRASKA:  Comp.  St.  1893,  c.  65,  { 
21.  NEW  .JERSEY:  Gen.  St  1895,  "Partnership,"  §  21.  NEW  YORK:  Rey. 
St  (9tli  Ed.)  pt  2,  c  4,  tit  1.  I  20.     NORTH  DAKOTA:    Rev.  Code  1895.  i 


480  LIMITED   PARTNERSHIPS.  (Ch.   10 

special  partner  violating  the  above  provisions,  or  concurring  in  any 
such  violation  by  the  partnersliip  or  an  individual  partner,  is,  Id 
most  states,  liable  as  a  general  partner.'^" 

219.  PROPERTY  A    TRUST   FUND    FOR  CREDITORS— 

Where  a  limited  partnership  becomes  insolvent,  the 
property  and  effects  of  the  firm  are  a  special  trust 
fund  for  the  payment  of  all  the  partnership  debts 
pro  rata,  except  debts  due  to  the  special  partner. 

The  statutory  provisions  intended  to  secure  equality  in  the  dis- 
tribution of  the  partnership  property  among  the  partnership  cred- 
itors in  case  of  insolvency  in  effect  create  such  property  a  trust  fund 
for  creditors.  In  Innes  v.  Lansing*"  the  court  said:  "It  is  evi- 
dent, from  these  statutory  provisions,  that  the  legislature  could  not 
have  intended  that  a  creditor  of  such  insolvent  limited  partnership 
should  be  compelled  to  proceed  to  judgment  and  execution  at  law, 
the  necessary  effect  of  which  might  be  to  give  him  a  preference  over 
other  creditors,  before  he  could  be  permitted  to  file  a  bill  in  this 
court,  to  prevent  the  partnership  funds  from  being  wasted  by  the 
insolvent  partners,  and  to  obtain  payment  of  a  ratable  portion  of 
his  debt  out  of  the  fund.  Although  any  creditor,  therefore,  may 
proceed  at  law  for  the  recovery  of  his  debt,  unless  a  decree  has  been 

4433.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  8 
27.  SOUTH  CAROLINA:  Rev.  St.  1893,  §  1425.  TENNESSEE:  Mill.  & 
V.  Code  1884,  §  2418.  TEXAS:  Rev.  St.  1895,  art.  3602.  VIRGINIA:  Code 
1887,  §  2874.'  WEST  VIRGINIA:  Code  1891,  c.  100,  §  10.  WISCONSIN: 
Saab.  &  B.  Ann.  St.  1889,  §  1720.     WYOMING:    Rev.  St.  1887,  §  4085. 

268  ALABAMA:  Code  1886,  §  1727.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  5469.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  24.  FLORI- 
DA: McClel.  Dig.  1881,  c.  159,  §  17.  GEORGIA:  Code  1882,  §  1941.  IOWA: 
McClain's  Code  1888,  §  3351.  MARYLAND:  Code  1888,  art.  73,  §  17.  MIN- 
NESOTA: Gen.  St.  1894,  §  2348.  NEBRASKA:  Comp.  St.  1893,  c.  65,  §  22. 
NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  22.  NEW  YORK:  Rev.  St. 
(9th  Ed.)  pt.  2,  c.  4,  tit,  1,  §  22.  OHIO:  Rev.  St.  1892,  §  3157.  PENNSYL- 
VANIA: Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  28.  SOUTH  CARO- 
LINA: Rev.  St.  1893,  §  1426.  TENNESSEE:  Mill.  &  V.  Code  1884,  §  2419. 
TEXAS:  Rev.  St.  1895,  art  3603.  WISCONSIN:  Sanb.  &  B.  Aim.  St  1889, 
§  1721.     WYOMING:    Rev.  St,  1887,  §  4087,  subd.  3. 

368  7  Paige  (N.  Y.)  583. 


§  219)         PROPERTY  A  TRUST  FUND  FOR  CREDITORS.  481 

obtained  in  this  court  for  the  benefit  of  all  the  creditors  equally, 
or  the  property  has  been  transferred  to  a  trustee  or  receiver  for 
the  purpose  of  having  such  a  ratable  distribution  thereof,  I  think 
this  court  is  bound  to  carry  into  effect  the  principle  of  the  statute, 
by  treating  the  property  of  the  limited  partnership,  after  insolvency, 
as  a  trust  fund  for  the  benefit  of  all  the  creditors.  *  *  *  I  re- 
gret that  I  am  obliged  to  extend  the  jurisdiction  of  this  court  to 
this  new  class  of  cases.  But  whenever  the  legislature  creates  new 
rights  in  parties,  for  the  protection  and  enforcement  of  which  rights 
the  common  law  affords  no  effectual  remedy,  and  the  statute  itself 
does  not  prescribe  the  mode  in  which  such  rights  are  to  be  pro- 
tected, this  court,  in  the  exercise  of  its  acknowledged  jurisdiction, 
is  bound  to  give  to  a  party  the  relief  to  which  he  is  equitably  en- 
titled under  the  statute."  This  case  was  quoted  with  approval  in 
a  Missouri  case,^'^  where,  in  an  able  opinion,  Bakewell,  J.,  said: 
"Whether  the  statute  does  or  does  not  impress  a  trust  upon  the  as- 
sets of  a  limited  partnership  from  the  moment  of  its  insolvency, 
it  certainly  does  seem  to  render  the  assets  trust  funds  in  a  sense 
in  which  those  of  an  ordinary  partnership  are  not  a  trust  fund,  and 
to  contemplate  a  remedy  for  the  creditor  which,  in  the  case  of  an 
ordinary  partnership,  he  cannot  have.  The  pro  rata  distribution  of 
the  assets  cannot  be  effected  without  the  aid  of  a  court  of  chancery. 
It  is  the  ordinary  jurisdiction  of  a  court  of  equity  to  dissolve  a 
partnership  and  distribute  its  assets  on  the  application  of  one  of 
the  partners.  From  the  moment  of  such  an  application,  the  funds 
became  trust  funds.  They  were  not  so  in  the  hands  of  the  part- 
ners. The  funds  of  a  limited  partnership  may  not  be  trust  funds 
in  the  hands  of  the  partners,  or  at  the  moment  of  insolvency,  but 
they  become  so  when  the  aid  of  equity  is  effectually  invoked;  and 
we  think  that  the  manifest  intention  of  the  legislature,  in  the  sec 
tions  quoted  above,  was  to  give  to  the  creditor  an  effectual  remedy. 
If  he  must  apply  first  to  a  court  of  law,  and  obtain  a  judgment, 
the  provisions  of  the  statute  are  nugatory.  He  has  then  no  pro 
tection  in  the  case  of  a  limited  partnership  which  he  has  not  in 
the  case  of  a  general  partnership."  In  both  these  cases  it  was  held 
that  a  general  creditor,  i.  e.  one  who  has  not  acquired  a  lien  as  by 

«»T  Batchelder  t.  Altheimer,  10  Mo.  App.  181. 
GBO.PART.— 31 


482  LIMITED    PARTNERSHIPS.  (Ch.   10 

judgment  and  execution,  could  maintain  a  bill  to  enforce  the  trust. 
It  is  not  necessary  that  any  improper  conduct  on  the  part  of  the 
partners  be  shown.  The  creditor  filing  the  bill  must  sue  on  behalf 
of  himself  and  all  other  creditors.^  •**  The  trust  may  be  enforced 
by  any  partner."* 

When  Trust  Begins. 

There  is  a  discrepancy  in  the  cases  as  to  the  period  at  which 
the  funds  of  a  limited  partnership  become  trust  funds  in  the  sense 
under  consideration;  the  earlier  cases  holding  that  from  the  mo 
ment  of  insolvency  they  become  trust  funds,  to  be  distributed 
equally,****  and  the  later  cases  deciding  that  a  preference  may  be 
obtained  by  hostile  proceedings  against  the  firm  after  insolvency,**' 
but  not  after  a  creditor  has  filed  his  bill  for  equitable  relief,  or  at 
least  not  after  the  appointment  of  a  receiver.***  The  appointment 
of  a  receiver  is  a  secjuestration,  by  act  of  law,  of  the  property,  which 
vests  in  him  by  relation  from  the  date  of  the  order.**^ 

268  Whitcomb  v.  Fowle,  7  Abb.  N.  C.  (N.  Y.)  295;  Van  Alrtyne  v.  Cook,  25  N. 
Y.  489;    La  Chaise  v.  Lord,  1  Abb.  Prac.  (N.  Y.)  213. 

2B9  Snyder  v.  Leland,  127  Mass.  291;   Bell  v.  Merrifield,  28  Uun  (N.  Y.)  219. 

280  Jackson  v.  Sheldon,  9  Abb.  Prac.  (N.  Y.)  127;  Inues  v.  Lansing,  7  Paige  (N. 
Y.)  583;    Whitewright  v.  Stimpson,  2  Barb.  (N.  Y.)  379. 

261  Van  Alstyne  v.  Cook,  25  N.  Y.  4S9;  Artisans'  Bank  v.  Treadwell,  34  Barb. 
(N.  Y.)  553;  Greene  v.  Breck,  32  Barb.  (N.  Y.)  73.  But  see  Jackson  t.  Shel- 
don, 9  Abb.  Prac.  (N.  Y.)  127.  Any  creditor  of  an  insolvent  limited  partner- 
ship, although  he  has  not  proceeded  to  judgment  and  execution  at  law,  may 
bring  an  action  to  restrain  the  insolvent  partners  from  disposing  of  the  prop- 
erty contrary  to  law,  and  for  the  appointment  of  a  receiver.  Whitcomb  v. 
Fowle,  7  Abb.  N.  C.  (N.  Y.)  295.  The  fact  that  persons  holding  judgment* 
by  confession  against  a  limited  partnership  sought  to  secure  a  preference  contrary 
to  the  statute,  and  failed,  will  not  postpone  them  to  other  creditors.  Green  v. 
Hood,  42  111.  App.  652. 

262  Artisans'  Bank  v.  Treadwell,  34  Barb.  (N.  Y.)  553;  Van  Alstyne  v.  Cook, 
25  N.  Y.  489;  Whitcomb  v.  Fowle,  5t>  How.  Prac.  ^N.  Y.)  3(>5;  Whitewright  ▼, 
Stimpson,  2  Barb.  (N.  Y.)  379. 

268  Batchelder  t.  Altheimer,  10  Mo.  App.  181. 


§    220)  ASSIGNMENTS    FOR    BENEFIT    OF    CREDITORS.  483 

220.  ASSIGNMENTS  FOR  BENEFIT  OF  CREDITORS— 
By  the  -vvreight  of  authority,  assignments  for  the  ben- 
efit of  creditors  cannot  be  made  "writhout  the  assent 
of  aU  the  partners,  general  and  special. 

It  has  been  seen  that  in  ordinary  partnerships,  by  the  weight  of 
authority,  one  partner  has  no  power  to  make  an  assignment  of 
the  firm  property  for  the  benefit  of  creditors,-'*  It  seems  that  the 
same  rule  is  applicable  to  limited  partnerships,  and  the  assent  of 
the  special  partner  is  necessary  to  the  validity  of  such  assignment. 
But  the  few  cases  on  the  subject  are  not  unanimous.^*"  It  seems 
that  the  rights  and  powers  of  an  assignee  of  a  limited  partnership 
are  the  same  as  the  rights  and  powers  of  the  assignee  of  a  general 
pari;nership,  unless  the  limited  partnership  was  insolvent  or  con- 
templating insolvency/''*' 

Statutory  Provisions. 

No  general  assignment  by  a  limited  partnership  in  case  of  in 
solvency  is,  in  several  states,  valid  unless  it  provide  for  a  distribu- 
tion of  the  partnership  property  among  all  the  creditors  in  pro 
portion  to  the  amount  of  their  several  legal  claims,^'^  except  that 

264  Ante,  p.  217. 

206  Bowen  v.  Argall,  24  Wend.  (N.  Y.)  49G;  Mills  v.  Argall,  6  Paige  (N.  Y.)  577; 
Hayes  v.  Heyer,  3  Sandf.  (N.  Y.)  284;  Darrow  v.  Brufif,  30  Uow.  Prac.  (N.  Y.)  479; 
Kerr  t.  Blodgett,  48  N.  Y.  02. 

2  86  Lancaster  v.  Choate,  5  Allen  (Mass.)  530;  Bullitt  v.  Chartered  Fund,  20  Pa. 
St.  108;  Robinson  v.  Mcintosh,  3  E.  D.  Smith  (N.  Y.)  221;  Merrill  v.  Wilson,  29 
Me.  58. 

2  87  DELAWARE:  Rev.  Code  1874,  c.  64,  §  6.  IDAHO:  Rev.  St  1887,  §  3286. 
INDIANA:  Rev.  St.  1894,  §  8117.  MICHIGAN:  How.  Ann.  St.  1882,  §  2356. 
MISSISSIPPI:  Code  1880,  §  1025.  MONTANA:  Civ.  Code  1895,  §  3317.  NE- 
VADA: (Jen.  St.  ISSr.,  §  4913.  RHODE  ISLAND:  Gen.  Laws  1890,  c.  157,  § 
10.  Cf.  Corbin  v.  Boies.  34  Fed.  692;  Green  v.  Hood,  42  111.  App.  652.  As  to  a 
preference  of  individual  creditors  out  of  the  special  partner's  individual  property, 
see  George  v.  Grant,  97  N.  Y.  202.  Code  1887,  §  2874,  providing  that  no  sale  of 
the  property  of  a  limited  partnership,  or  of  any  interest  therein,  shall  be  valid  if 
made  by  the  partnership,  or  by  any  partner,  at  a  time  when  he  or  it  has  not  sufB- 
cient  property  to  pay  debts,  for  the  purpose  of  preferring  creditors,  etc.,  does  not 
affect  a  bona  fide  purchaser,  living  in  a  distant  state,  who  takes  property  standing 
in  tbe  name  of  the  partner,  without  knowledge  of  any  partnership,  or  that  the 
assets  of  a  partnership  have  been  employed  in  buying  or  improving  it.  State  Bank 
of  Virginia  v.  Blanchard,  90  Va.  22,  17  S.  E.  742. 


484  LIMITED    PARTNERSHIPS.  (Ch.    10 

the  claims  of  the  United  States,  arising  from  bonds  or  duties,  are 
first  to  be  paid  or  secured.^"  The  assent  of  creditors  to  such  as- 
signment is  presumed  unless,  within  60  days  after  notice  thereof, 
they  dissent  expressly,  or  by  some  act  clearly  implying  such  dis- 
sent. "*^^  No  such  assignment  is  valid  unless  notice  thereof  be  given 
in  some  newspaper  published  in  the  county  where  is  the  primipaJ 
place  of  business,  within  14  days  thereafter.'^** 

221.  SPECIAIi  PARTNER    AS   A   CREDITOR— The   stat- 

utes generally  provide  that,  in  case  of  insolvency 
of  the  firm,  no  special  partner  shall  be  allowed  to 
claim  as  a  creditor  until  the  claims  of  all  others  are 
satisfied.''^ 

222.  In  tlie  absence  of  such  statutes,  except  as  to  capital, 

the  special  partner  stands  on  a  par  with  other  cred- 
itors. 

Meaning  of  ''*' Insolvency.'^'* 

It  seems  that  the  term  "insolvency"  is  used  in  this  connection  in 
a  different  sense  from  that  before  considered.     There  it  meant  lack 

288  MICHIGAN:  How.  Ann.  St.  1SS2,  §  2356.  RHODE  ISLAND:  Gen.  Laws 
189G.  c.  157,   §  10. 

289  INDIANA:  Rev.  St.  1804,  §  8118.  MICHIGAN:  How.  Ann.  St.  18S2,  § 
2357.      MONTANA:   Comp.  St  1887,  §  1(305.      NEVADA:   Gen.  St.  1885,  §  4914. 

270  INDIANA:  Rev.  St.  1894,  §  8118.  MICHIGAN:  How.  Ann.  St.  1882,  { 
2357.  MONTANA:  Comp.  St  1887.  §  1605  (20  days).  NEVADA:  Gen.  St  1885, 
§  4914. 

271  ALABAMA:  Code  1886,  §  1728.  ARKANSAS:  Sand.  &  H.  Dig.  1804,  § 
5470.  CALIFORNIA:  Civ.  Code  18SG.  §  249L  DAKOTA:  Comp.  Laws  18S7, 
i  4084.  DISTRICT  OF  COLUMBIA:  Comp.  St  1894,  c.  43,  §  25.  FLORIDA: 
McClel.  Dig.  1881,  c.  159,  §  18.  GEORGIA:  Code  1882,  §  1942.  IDAHO:  Rev. 
St.  1887,  S  3281.  ILLINOIS:  2  Starr  &  C.  Ann.  St  1896,  c  84,  S  23.  IOWA: 
McClain's  Code  1888,  §  3352.  KENTUCKY:  St  1894,  c  04,  §  3775.  MARY- 
LAND: Code  1888,  art  73,  §  18.  MINNESOTA:  Gen.  St  1894,  §  2349.  MIS- 
SISSIPPI: Code  1892,  §  2781.  MISSOURI:  Rev.  St.  1889,  §  7203.  NE- 
BRASKA: Comp.  St  1S93,  c.  65,  §  23.  NEW  HAMPSHIRE:  Pub.  St  1891,  c. 
122,  §  12.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership,"  §  23.  NEW  YORK: 
Rev.  St  <9th  Ed.)  pt  2,  c.  4,  tit  1,  §  23.  NORTH  CAROLINA:  Code  1883,  § 
3107.     NORTH  DAKOTA:    Rev.  Code  1895,  §  4428.     OHIO:    Rev.  St  1892,  { 


§§    221-222)  SPECIAL    PARTNER    AS    A    CREDITOR.  485 

of  assets  sufficient  to  pay  all  debt."'  Here  it  seems  to  mean  a  de- 
clared insolvency  and  a  judicial  winding  up  of  the  firm.  This  view 
is  supported  by  the  ver^'  great  authority  of  Mr.  Bates,""  and  by  the 
fact  that  the  statutes  provide  no  penalty  for  a  violation.  The  only 
consequence  of  an  attempted  violation  is  that  the  provision  for  the 
special  partner  is  void."*  Merely  naming  a  special  partner  as  a  cred- 
itor in  a  general  assignment  for  the  benefit  of  creditors  does  not 
amount  to  an  interference,  nor  render  him  liable  as  a  general  part- 
ner.^"'' It  is,  of  course,  possible  that  the  provision  for  the  special 
partner  may  be  void  under  the  section  relating  to  conveyances  in 
contemplation  of  insolvency,  in  which  case,  as  has  been  seen,  the 
penalty  for  a  violation  is  liability  as  a  general  partner.'^* 

Ajpplication  of  Statute. 

Prior  to  insolvency,  the  special  partner  stands  upon  the  footing 
of  any  other  creditor,  and  may  deal  with  the  firm  as  such.^^^  The 
prohibition  applies  both  to  the  special  partner's  claim  for  capital 

3158.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1SD4,  "Limited  Partnership,"  §  29. 
RHODE  ISLAND:  Gen.  Laws  lS9t>,  c.  157,  §  11.  SOUTH  CAROLINA:  Rev. 
St.  1893,  §  1427.  TENNESSEE:  Mill.  &  V.  Code  1884.  |  2420.  TEXAS:  Rev. 
St  181>5,  art.  3004.  UTAH:  Comp.  Laws  1888,  §  2492.  VIRGINIA:  Code  1887. 
f  2873.  WEST  VIRGINIA:  Code  1891,  c.  100,  §  9.  WISCONSIN:  Sanb.  & 
B.  Ann.  St.  18^9,  §  1722.  WYOMING:  Rev.  St.  1887,  §  4080.  And  see  CON- 
NECTICUT:  Gen.  St.  1888,  §  3283.      Dunning's  Appeal,  44  Pa.  St.  150. 

27  2  Ante,  p.  480.  Proccodiugs  Ln  Insolvency  against  J.  S.  on  his  petition  do  no^ 
necessarily  include  a  limited  partnership  doing  business  under  his  name,  and  in 
which  he  Is  the  general  partner,  but  which  is  not  mentioned  in  the  petition,  notice, 
or  assigumenL      Nutting  v.  Ashcioft,  101  Mass.  300. 

273  Lim.  Partn.  §  181.  And  see  Ward  v.  Newell,  42  Barb.  (N.  Y.)  4S2;  Wilkius 
T.  Davis.  2  Low.  511,  Fed.  Cas.  No.  17.<i<^. 

2T4  Bowen  v.  Argall,  24  Wend.  (N.  Y.)  49G;  Durant  v.  Abendroth,  97  N.  Y.  132; 
Mattison  v.  Demarest,  4  Rob.  (N.  Y.)  161;  Mills  v.  Argall,  G  Paige  (N.  Y.)  577. 
On  the  dissolution  of  a  limited  partnership,  the  business  was  continued  by  the  gen- 
eral partners,  who  took  the  assets  of  the  old  firm.  Afterwards  the  new  firm  be- 
came insolvent,  and  they  paid  the  partner  who  had  retired  the  amount  of  capital 
which  he  had  contributed.  It  appeared  that  the  special  partnership  was  insolvent 
when  it  dissolved.  Held,  that  such  payment  was  fraudulent  as  to  creditors  both 
of  the  old  and  the  new  firm.  Van  Brunt,  P.  J.,  dissenting,  on  the  ground  that 
the  transfer  was  fraudulent  only  as  to  creditors  of  the  special  partnership.  Bally 
▼.  Homthal,  89  Hun.  514,  35  N.  Y.  Supp.  437. 

27B  Bowen  v.  Argall,  24  Wend.  (N.  Y.)  496. 

2T6  Ante,  p.  478.  a^T  See  ante,  p.  472. 


486  LIMITED    PARTNER-HIPS.  (Ch.    10 

contributed,  and  to  an  indebtedness  arising  out  of  loans,  advance- 
ments, money  paid  for  the  firm,  and  the  like.  His  claims  in  either 
case  are  postponed  to  those  of  other  creditors.  As  to  the  claim  for 
capital,  this  would  be  true,  even  in  the  absence  of  the  provision  un- 
der discussion;  ^^®  and  it  seems  clear,  therefore,  that  the  provision 
applies  to  any  and  all  other  debts  due  the  special  partner,  for  other- 
wise it  would  be  entirely  useless  and  of  no  effect.  This  is  the  con 
struction  put  upon  the  statute  by  the  weight  of  authority."^  In 
Connecticut  this  provision  has  been  held  to  mean  that  a  special 
partner  shall  not  be  allowed  to  claim  as  a  creditor  any  portion  of 
the  fund  put  in  by  him  as  capital,  and  not  that  he  should  be  de- 
prived of  the  rights  of  a  creditor  as  to  debts  owed  him  by  the  part 
nership."°  In  New  York,  in  1857,"'  the  statute  was  amended  so 
as  to  permit  the  special  partner  to  come  in  on  a  par  with  other 
eredilors,  the  New  York  decisions  having  previously  taken  the  other 
view.^'*  The  statute  only  applies  to  claims  due  the  special  partner 
personally.  It  does  not  apply  to  claims  due  another  firm  of  which 
the  special  partner  is  also  a  member.^*'  nor  to  claims  of  a  corpo 
I'ation,  in  which  the  special  partner  is  a  stockholder."*  It  does  not 
apply  to  claims  arising  after  a  dissolution,**"  nor,  of  course,  to 
individual  transactions  between  the  general  and  special  partner, 
having  nothing   to  do  with  the  partnership  iiJTairs.'""     The  provi- 

27  8  White  V.  Hackett.  20  N.  Y.  178. 

27  9  White  V.  Hackett.  20  N.  Y.  ITS;  Vbd  Aistyne  t.  Cook.  25  .N.  Y.  489: 
Siupor  V.  Kelly,  44  Pa.  St.  145;  Uall  t.  Glessner,  100  Mo.  155,  13  S.  W.  349; 
Jaflfe  V.  Krum,  88  Mo.  GO!). 

2  80  Cl:u>p  V.   Lacey,  35  Conn.  4G.'i. 

281  Laws  1857,  c.  414. 

282  Mills  T.  Argall,  6  Taige  (N.  Y.)  577;  Hayet  t.  Bpment.  3  Snndf.  (N.  Y.) 
394;   Hayes  v.  Heyer,  35  N.  Y.  326.     Cf.  White  v.  Hackett,  20  N.  Y,  178. 

283  Hayes  v.  Bement,  3   Sandf.  (N.  Y.)  394. 
2  84  Hayes  v.  Heyer,  35  N.  Y.  326. 

28  5  Hayes  v.  Heyer,  35  N.  Y.  326;  Durant  v.  Abt  udroth,  97  N.  Y.  132. 

286  Battaille  v.  Battaille,  G  La.  Ann.  6S2.  In  insolvency  proceedings  to  wind  up 
the  business  of  an  Insolvent  commercial  partnership,  a  partner  in  commcudam,  who 
claims  to  be  a  creditor  of  his  co-partner,  does  not  occupy  a  better  position  than  a 
full  or  active  partner;  and  hence  he  cannot  be  allowed,  as  against  creditors  to  en- 
force a  pledge,  granted  to  him  by  his  co-partner,  on  the  latter's  share  of  the  part- 
nership property.     Sherwood  v.  Hi»  Creditors,  42  La.  Ann.  103,  7  South.  79. 


§§    224-226)  TERMINATION    OF   FUTURE    LIABILITY.  487 

sion  is  for  the  benefit  of  creditors,  and  cannot  be  invoked  as  a  de 
tense  by  the  general  partners.*'^ 

TERMINATION  OF  RELATION— DISSOLUTION. 

223.  The  term  "dissolution,"  as  applied  to  limited  partner- 

ships, is  used  ambiguously  to  mean  either 

(a)  The  termination  of  all  future  liability  (p.  487),  or 

(b)  The  change  from  limited  to  general  liability  (p.  493). 

SAME— TERMINATION  OF  FUTURE  LIABILITY. 

224.  A  limited  partnership   may  be  dissolved,  and  all  fu- 

ture liability  of  all  partners  terminated,  either 

(a)  By  operation  of  law  (p.  487),  or 

(b)  By  act  of  the  parties  (p.  491). 

226.  BY  OPERATION  OF  LAW— A  limited  partnership 
is  dissolved  by  operation  of  law,  in  the  sense  of  the 
termination  of  all  future  liability  of  all  the  part- 
ners, in  the  following  cases: 

(a)  By  limitation  (p.  487). 

(b)  By  bankruptcy  of  the  firm  or  any  member  of  it  (p. 

4S8  . 

(c)  By  abandonment  (p.  488). 

(d)  By  death  (p.  488). 

(e)  By  judicial  decree  (p.  489). 

(f )  By  conveyance  of  one  partner's  interest  (p.  489). 

226.  No  notice  of  dissolution  by  operation  of  law  is  nec- 
essary except  in  the  case  of  the  conveyance  of  one 
partner's  interest. 

Termination  hy  Limitation. 

Upon  the  expiration  of  the  term  desij2rnated  In  the  certificate  for 
its  continuance,  a  limited  partnership  terminates  absolutely  by  oper- 
ation of  law,  and  without  notice.  The  partners  no  longer  have  the 
power  to  bind  each  other.*"     The  certificate  recorded   and  pub 

asT  Brooke  v.  Alexander,  3  Wkly.  Notes  Cas.  304. 

Its  Haggerty   t.  Taylor,  10  Paige  (N.  Y.)  261;    Marshall   t.   Lambeth.  7   Rob. 


488  LIMITED    PARTNERSHIPS.  (Ch.    10 

lished  at  the  time  the  partnership  was  formed  must  specify  when  the 
partnership  is  to  terminate,  and  is  sufficient  notice  to  the  public. 
In  the  case  of  a  general  partnership,  notice  of  dissolution  upon  ex- 
piration of  the  term  limited  is  necessary,  because  in  such  case  the 
public  is  not  presumed  to  have  any  knowledge  of  the  stipulations 
in  the  partnership  articles.**' 

Bankruptcy  and  Insolvency. 

Bankruptcy  or  an  assignment  for  the  benefit  of  creditors  of  either 
the  firm  or  a  general  or  special  partner  works  a  dissolution  of  the 
partnership  by  operation  of  law  and  without  notice.*""  In  Penn- 
sylvania, by  statute,  the  insolvency  of  a  spt-cial  partner  does  not 
cause  a  dissolution  of  the  partnership,  but  his  interest  may  be  sold 
by  his  assignee.'"* 

Abandonment. 

In  Outcalt  V.  Burnet '"  it  was  held  that,  under  the  section  pro 
viding  that  an  alteration  shall  be  deemed  a  dissolution,  the  aban- 
donment of  the  business  by  the  general  partnera  worked  a  disso- 
lution.    No  notice  is  necessary. 

Death. 

In  the  absence  of  any  contract  or  statutory  provision  to  the  con- 
trary,*"' a  limited  partnership  is  dissolved  by  the  death  of  either 
a  general  or  a  special  partner.'"*  In  some  states  this  is  specifically 
provided  by  statute,*""  In  a  few  states,  however,  it  is  provided  by 
statute  that  death  shall  not  cause  a  dissolution  unless  the  articles 

(La.)  471.  When  the  limited  partnership  was  not  properly  formed,  notice  of  the 
expiration  must  be  given  to  terminate  liability.  Uaviland  T.  Chace,  39  Barb.  (N. 
Y.)  283. 

280  See  ante,  p.  407. 

2  90  Wilkins  v.  Davis,  2  Low.  511,  Fed.  Cas.  No.  17,664.  The  dissolution  of  a 
limited  partnership  by  insolvency  prior  to  the  expiration  of  its  term  will  not  render 
the  special  partner  liable  as  a  general  partner.  Continental  Nat.  Bank  of  Boston 
V.  Strauss  (Super.  N.  Y.)  17  N.  Y.  Supp.  188. 

«9i  Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  $  32. 

292  1  Handy  (Ohio)  404;    In  re  Terry,  5  Biss.  110,  Fed.  Cas.  No.  13,83a 

2»«  ILLINOIS:    2  Starr  &  C.  Ann.  St  1896,  c.  84,  8  13. 

2»*  Ames  V.  Downing,  1  Bradf.  Sur.  (N.  Y.)  321. 

296  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §  30.  ILLINOIS:  3 
Starr  &  O.  Ann.  St  1896,  c  84,  §  13.  NEW  YORK:  Rev.  St  (9th  Ed.)  pt  2,  c. 
4,  tit  1,  §  12. 


§§    224-226)  TERMINATION    OF    FUTURE    LIABILITY.  489 

80  provide.^"  In  all  states  it  is  probably  competent  for  the  parties 
to  agree  that  death  shall  not  work  a  dissolution,  and  the  statutes 
of  some  states  expressly  authorize  such  contracts.*"^  Notice  of 
dissolution  by  death  is  unnecessary.'"* 

Judicial  Decree. 

A  limited  partnership  may  be  dissolved  by  judicial  decree  at  the 
instance  of  either  a  general  or  special  partner,  upon  the  same 
grounds  that  a  dissolution  of  a  general  partnership  will  be  de- 
creed, i.  e.  insanity  or  other  incompetency  of  a  partner,  miscon- 
duct, or  impossibility  of  conducting  the  business  at  a  profit.^"" 

Conveyance  of  Partner^ 8  Interest. 

In  the  absence  of  contract  or  statutory  provision  to  the  con- 
trary,'°°  the  conveyance  of  any  partner's  interest  in  a  limited  part- 
nership works  a  dissolution,  as  in  the  case  of  a  general  partner 
ship.*"*  But  in  order  to  terminate  liability,  notice  is  necessary.^'' * 
In  the  case  of  limited  partnerships,  such  a  conveyance  would  also 
be  an  alteration,  and,  as  has  been  seen,  if  the  business  is  thereafter 
carried  on,  the  partnership,  in  most  states,  becomes  general.*"'  But 
if  the  special  partner  retires  upon  the  alteration,  unless  he  can  be 
deemed  a  dormant  partner,  he  must  give  notice,  as  in  the  case  of 
a  general  partnership,  in  order  to  terminate  his  general  liability; '"* 

2»«  FLORIDA:  McCleL  Dig.  1881,  c.  159.  §  20.  NEW  YORK:  Rev.  St.  (9th 
Ed.)  pt.  2,  c.  4.  tit.  1,  S  12.  TENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited 
Partnership."  §  35.      But  see  Hardt  v.  Levy,  72  Hun.  225.  25  N.  Y.  Supp.  248. 

«»7  Richter  V.  Poppenhauseu,  42  N.  Y.  373;  Waikenshaw  t.  Perzel.  32  How. 
Prac.  (N.  Y.)  233.  ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c  84,  §  14.  NEW 
YORK:    Rev.  St.  (9th  Ed.)  pt.  2,  c.  4.  tit.  1,  §  12. 

aesjacquin  v.  Buisson,  11  How.  Prac.  (N.  Y.)  385;  Mattison  v.  Demarest,  4 
Rob.  (N.  Y.)  161.  In  case  of  limited  partnership  under  the  act  of  1837  (Elmer. 
Dig.  p.  376),  the  alteration  caused  by  the  death  of  a  special  partner  affects  only 
transactions  carried  on  after  such  alteration,  and  does  not  affect  prior  debts  or 
other  transactions  of  the  firm.  Perth  Amboy  Manuf'g  Co.  v.  Condit,  21  N.  J. 
Law,  659. 

298  See  ante,  p.  404. 

•0  0  See  infra,  note  306. 

«oi  Wisner  v.  Ocumpaugh,  71  N.  Y.  113;  Fox  v.  Graham,  Mich.  N.  P.  90; 
Beers  v.  Reynolds.  11  N.  Y.  97. 

8«2  Lachaise  v.  Marks,  4  E.  D.  Smith  (N.  Y.)  610. 

803  Ante,  p.  4138. 

»<»4  Buckley  v.  Lord,  24  How.  Prac.  (N.  Y.)  455;    Beers  v.  Reynolds,  11  N.  Y. 


490  LIMITED    PARTNERSHIPS.  (Ch.    10 

and  perhaps  the  statutory  notice  hereafter  discussed  would  be  nec- 
essary to  terminate  the  remaining  partner's  power  to  bind  the  spe- 
cial partner  to  the  extent  of  his  contribution.' °" 

Sarae — Statutory  Provisions. 

The  following  statutory  provisions  as  to  sales  of  a  partner's  in- 
terest are  enforced  in  the  states  named  in  the  notes:  Any  special 
partner  or  his  legal  representative  may  sell  his  interest  in  the  part- 
nership without  working  a  dissolution  thereof  or  rendiiing  the  part 
nership  general,  and  the  purchaser  thereupon  becomes  a  special  part 
ner,  with  the  same  rights  as  an  original  special  partner.*"'  But 
a  notice  of  such  sale  must  be  filed  or  recorded  and  published  with 
the  original  record.^"^  And  such  partner  making  such  sale  must 
have  the  written  assent  of  the  other  partners. '°*  This  consent  may 
be  given  in  advance  in  the  original  certificate  of  partnership  or  other 
like  instrument.^""  A  sale  of  a  part  interest  or  share  may  be  mad*' 
in  the  same  way.'^"  The  general  partners,  or  either  of  them,  may 
purchase  a  part  or  the  whole  of  the  interest  of  one  or  more  special 
partners.'"     A  special  partner  may  devise  his  interest.'*"     The  in 

97;  Bulkley  v.  Marks,  15  Abb.  Prac.  (N.  Y.)  454;  Marshall  t.  Lambeth,  7  Rob. 
(La.)  471.  As  to  DOtice  by  a  general  partner,  see  ante,  p.  257.  On  an  agree- 
ment to  dissolve  a  limited  partnership,  the  special  partner  took  the  general  part- 
ner's notes  in  repayment  of  his  special  capital,  and  the  firm  was  thereafter  dis- 
solved in  the  manner  prescribed  by  statute.  The  notes  were  never  paid.  Ileld, 
that  the  special  partner  was  not  liable  on  a  note  given  by  the  general  partner, 
nearly  three  mouths  after  the  dissolution,  to  a  person  who  had  not  previously  dealt 
with  the  tirm.  Waters  v.  Harris  ^Super.  N.  1.)  17  N.  Y.  fcjupp.  370. 
3  0',  Post,  p.   491. 

306  KANSAS:  Gen.  St  1889,  par.  3980.  MICHIGAN:  How.  Ann.  St.  1882, 
§  23UL  NEW  JERSEY:  Gen.  St.  1895,  "Partnership."  $  2G.  NEW  YORK: 
Rev.  St.  (9th  Ed.)  pt.  2,  c.  4.  tit.  1,  §  12.  I'ENNSYLVANIA:  Pepper  &  L.  Dig. 
1894,  "Limited  Partnership,"  §  32. 

307  KANSAS:  Gen.  St.  1889.  par.  3989.  MICHIGAN:  How.  Ann.  St.  1882, 
§§  23U1,  23(52.  NEW  JERSEY:  Gen.  St.  1895,  "Partnership."  §  26.  NEW 
YORK:  Rev.  St  (9th  Ed.)  pt.  2,  c.  4.  tit  1,  S  12.  PENNSYLVANIA:  Pepper 
&  L,  Dig.  1894,  "Limited  Partnership,"  §  31. 

308  KANSAS:  Gen.  St  1889,  par.  3989.  PENNSYLVANIA:  Pepper  &  L. 
'^)ig.  1894.  "Limited  Partnership."  §  32. 

309  I>ENNSYLVAN1A:    Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  33. 

•  10  Id. 

•  11  Id. 

812  PENNSYLVANIA:     Pepper  &  L.  Dig.  1894,  "Limited  Partnership,"  §  35. 


§    227)  TERMINATION    OF    FUTURE    LIABILITY.  491 

tercst  of  a  general  partner  may  be  sold  in  the  same  way.'*'  Tho 
liability  of  the  original  partners  remains  uncbanged,  except  as  be 
tween  each  other,  until  the  required  certiticate  is  filed  and  pub- 
lished.'^* A  general  partner  in  a  limited  partnership,  with  the 
written  consent  of  his  partners,  by  deed  acknowledged  and  recorded, 
or  by  will,  may  sell,  assign,  or  bequeath  his  interest  in  the  partner- 
ship. So  his  executor  or  administrator  may  do  so.  A  correspond- 
ing alteration  mu.st  be  made  in  the  name  of  the  firm."* 

227.  BY  ACT  OF  PARTIES— No  dissolution  by  the  volun- 
tary acts  of  the  parties  can  take  place  previous  to 
the  time  specified  in  the  certificate,  until  a  notice 
of  such  dissolution  is  filed  and  recorded,  and  also, 
in  most  states,  duly  published. 

It  is  provided  substantially,  in  the  statutes  of  nearly  all  the 
states,  that  no  dissolution  of  a  partn»'rsliip  by  the  acts  of  the  par 
ties  can  take  place  previous  to  the  time  specified  for  its  termina- 
tion in  the  certificate  of  its  formation  or  renewal,  until  a  notice  of 
such  dissolution  is  filed  and  recorded  in  the  oflice  in  which  the  orig- 
inal certificate  was  recorded.^^^      In  some  statutes  the  wording  is, 

8i»  MICHIGAN:    How,  Ann.  St.  1882,  §  23G1. 

«i*  MICHIGAN:  How.  Ann.  St.  1882,  §  23G3.  And  see  Beers  v.  Reynolds,  12 
Barb.  (N.  Y.)  2S8;  Faushawe  v.  Laue,  IG  .\bl).  Trac.  (N.  Y.)  7L  Under  the 
twenty-fourth  section  of  the  statute  of  New  York  in  regard  to  limited  partnerships 
(1  Rev.  St.  p.  Tt>7),  requiring  notice  of  dissohition,  previous  to  the  time  specilied 
in  the  certificate  of  its  formation,  to  be  published  "once  in  each  woeli,  for  four 
weeks,"  the  day  of  the  week  which  is  taken  for  the  first  publication  must  be 
taken  for  each  of  the  subsequent  pubhcations.  In  re  King,  5  Ben.  453,  7  N.  B. 
U.  279,  Fed.  Gas.  No.  7,779. 

315  PENNSYLVANIA:     Pepper  &  L.  Dig.  1894,  -'Limited  Partnership,"  §  31. 

316  ALABAMA:  Code  18SG,  §  1729.  ARKANSAS:  Sand.  &  H.  Dig.  1894. 
§  5471.  CALIFORNIA:  Civ.  Code  1S8G.  §  2509.  COLORADO:  Mills'  Ann. 
St.  1891,  §  3381.  DAKOTA:  Comp.  Laws  1SS7,  §  409G.  DELAWARE:  Rev. 
Code  1893,  c.  64,  §  8.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  o.  43,  § 
30.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  19.  GEORGIA:  Code  1882,  § 
1943.  IDAHO:  Rev.  St.  1887,  §  3293.  ILLINOIS:  2  Starr  &  C.  Ann.  St. 
1896,  c.  84,  §  12.  INDIANA:  Rev.  St.  1894,  §  8120.  IOWA:  McClain'a  Code 
1888,  §  3353.  KANSAS:  Gen.  St.  1889,  par.  3996.  MAINE:  Rev.  St.  ISS.J. 
c  33,  8   9.      MARYLAND:     Code    1888,   art.  73,    §  21.     MASSACHUSETTS: 


492  LIMITED    PARTiNERSHIPS.  (Ch.    10 

"no  dissolution  except  by  operation  of  law"  and  in  others  as  above 
given,  that  "no  dissolution  by  the  acts  of  the  parties  can  take  place 
until,"  etc.  The  meaning  in  both  cases  is  the  same.  In  most 
states  such  notice  must  also  be  duly  published  for  the  prescribed 
time.^^^      Mr.  Bates  is  of  the  opinion,'^*  which  is  probably  correct, 

Pub.  St.  1882,  c.  75,  S  10.  MICHIGAN:  How.  Ann.  St.  1SS2.  §  2359.  MIN- 
NESOTA: Gen.  St.  1894,  §  2350.  MISSISSIPPI:  Ck)de  1892.  S  2777,  MIS- 
SOURI: Rev.  St.  1889.  §  7205.  MONTANA:  Civ.  Code  1895,  §  3^42.  NE- 
BRASKA: Comp.  St.  1893,  c.  65,  §  24.  NEVADA:  Gen.  St.  1885,  S  491G. 
NEW  HAMPSHIRE:  Pub.  St.  1891,  c.  122.  §  10.  NEW  JERSEY:  Gen.  Si. 
1895,  "Partnership,"  §  24.  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit.  1. 
§  24.  NORTH  CAROLINA:  Code  1883,  §  3108.  NORTH  DAKOTA:  Rev. 
Code  1895,  §  4440.  OHIO:  Rev.  St.  1892,  §  3159.  OREGON:  2  Hill's  Ann. 
Laws  1892,  (  3856.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Part- 
nership," §  30.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  §  13.  SOUTH 
CAROLINA:  Rev.  St  1893,  §  1428.  TENNESSEE:  Mill.  &  V.  Code  1884,  § 
2421.  TEXAS:  Rev.  St  189.J,  art.  3(J0.j.  UTAH:  Comp.  Laws  1888,  §  2493. 
VERMONT:  St  1894,  §  4285.  VIRGINIA:  Code  1887,  §  2875.  WASHING- 
TON: Gen.  St  1891,  §  2925.  WEST  VIRGINIA:  Code  1891,  c.  100.  S  11. 
WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  8  1723.  WYOMING:  Rev.  St  18S7, 
§  4092. 

817  COLORADO:  Mills'  Ann.  St  1891,  S  3381.  DAKOTA:  Comp.  Laws 
1887,  §  4096.  DELAWARE:  Rev.  Code  1893,  c.  64,  §  8.  DISTRICT  OP 
COLUMBIA:  Comp.  St  1894.  c.  43.  §  30.  GEORGIA:  Code  1882.  §  1943. 
IDAHO:  Rev.  St.  1887,  §  3293.  ILLINOIS:  2  Starr  &  C.  Ann.  St  1896,  c. 
84.  §  12.  INDIANA:  Rev.  St  1894.  §  8120.  KANSAS:  Gen.  St  1889,  par. 
3996.  KENTUCKY:  St  1894,  c.  94,  §  3777.  MAINE:  Rev.  St.  1883,  c.  33. 
§  0.  MASSACHUSETTS:  Pub.  St  1882.  c.  75,  i  10.  MICHIGAN:  How. 
Ann.  St  1882.  §  2359.  MISSOURI:  Rev.  St  1889,  §  7205.  NEVADA:  Gen. 
St  1885,  §  4916.  NORTH  DAKOTA:  Rev.  Code  189G,  §  4440.  OREGON:  2 
Hill's  Ann.  Laws  1892,  §  3856.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157, 
§  13.  UTAH:  Comp.  Laws  1888,  §  2493.  VERMONT:  St  1894,  8  4285. 
VIRGINIA:  Code  1887.  §  2875.  WASHINGTON:  Gen.  St  1891,  §  2925. 
WEST  VIRGINIA:  Code  1891,  c.  100,  §  IL  WYOMING:  Rev.  St  1887.  § 
4092,  The  publication  must  be  once  a  week  for  four  weeks:  ARKANSAS:  Sand. 
&  H.  Dig.  1894,  §  5471.  FLORIDA:  McClel.  Dig.  1881,  c.  159,  §  19.  GEOR- 
GIA: Code  1882.  §  1943.  IOWA:  McClain's  Code  1888.  §  3353.  MARY- 
LAND: Code  1888.  art.  73.  §  21.  MINNESOTA.  Gen.  St.  1894,  §  2350.  NE- 
BRASKA: Comp.  St  1893,  c.  65,  §  24.  NEW  HAMPSHIRE:  Gen.  Laws 
1878,  c  118,  §  10.  NEW  JERSEY:  Gen.  St  1895,  "Partnership."  §  24.  NEW 
YORK:     Rev.  St  (9th  Ed.)  pt  2,  c.  4,  tit  1,  §  24.     NORTH  CAROLINA:    Code 

•It  Lim.  Partn.  f  141. 


§    229)  ACTIONS BETWEEN    MEMBERS.  493 

that  this  provision  of  the  statute  relates  solely  to  the  suflBciency  of 
the  notice  as  between  the  special  partners  and  the  creditors,  and 
that  a  general  partner  who  desires  to  protect  himself  against  the 
acts  of  other  general  partners  must  give  the  notice  of  dissolution 
required  in  the  case  of  general  partnerships,  and  cannot  rely  upon 
this  statutory  notice  for  protection  from  future  liability.  The  stat- 
utory notice  merely  protects  the  fund  of  the  special  partner  from 
further  dealings  by  the  general  partner. 

SAME— CHANGE  FROM    LIMITED    TO  GENERAL  LIABILITY. 

228.  A  dissolution  in  the  sense  of  a  termination  of  limited 

liability,  and  the  substitution  of  liability  as  general 
partners,  occurs  in  the  case  of  withdra^wal,  altera- 
tion, or  interference. 

We  have  seen  that  the  penalty  in  most  cases  for  a  "withdrawal," 
"alteration,"  or  "interference"  contrary  to  the  statute,  is  liability 
thereafter  as  a  general  partner.'^*  In  such  case  the  limited  pai-t- 
nership  is  dissolved  or  terminated,  but  a  relation  of  general  part- 
nership exists  between  the  members,  unless  terminated  by  proper 
steps,  including  notice.  Tliis  su]»ject  has  been  sufficiently  discussed 
under  the  respective  heads  of  withdrawal,  alteration,  or  interfer- 
ence. 

ACTIONS— BETWEEN  MEMBERS. 

229.  Actions  between   members   of  a  limited  partnership 

are  subject  to  substantially  the  same  rules  as  apply 
to  actions  between  members  of  a  general  partner- 
ship. 

1883.  §  3108.  OHIO:  Rev.  St.  1892,  §  3159.  PENNSYLVANIA:  Pepper  & 
L.  Dig,  1894,  "Limited  Partnership,"  §  30.  TEXAS:  Rev.  St.  1895,  art,  3605. 
WISCONSIN:  Sanb.  &  B.  Ana.  St.  1889,  §  1723.  For  three  weeks:  ALA- 
BAMA: Code  188G,  §  1729.  MONTANA:  Rev.  St.  1879,  div.  5,  S  953.  For 
three  months:  SOUTH  CAROLINA:  Rev.  St.  1893.  |  1428.  For  thirty  days: 
MISSISSIPPI:  Code  1892,  §  2777. 
«!•  See  ante,  pp.  463,  468,  472. 


494  LIMITKD    PARTNERSHIPS.  (Ch.    10 

Thus,  though  a  special  partner  may  claim  as  a  creditor,  yet  he 
cannot  maintain  an  action  at  law  to  recover  his  debt.^'^"  The  rule 
that  prevails  in  general  partnerships  prevails  here  also."^  The  ac- 
tion would  involve  a  partnership  accounting. 

SAME— BETWEEN  FIRM  AND  THIRD  PERSONS. 

230.  Actions  between  the  firm  and  third  persons  may  be 
brought  by  and  against  the  general  partners  only. 

The  statutes  very  generally  provide  that  all  suits  respecting  the 
business  of  the  partnership  shall  be  brought  by  and  against  the 
general  partners  in  the  same  manner  as  if  there  were  no  special 
partners.^"      It  is   usually  also  provided   that   in  cases  where  the 

8^0  Wiird  V.  NL-well.  42  liurb.  (N.  Y.)  4811;  Battaille  v.  Battaille,  6  La.  Ann.  682. 
Cf.  i'us'y  V.  Dusfubury,  TO  I'a.  St.  437;  WilU-r  v.  Wood,  U  Kulp  (l*a.)  520.  Al- 
tbouglj  it  be  conceded  that  uo  action  at  law  will  lie  between  partner*  to  recover 
moneys  accruing  to  either  in  the  actual  conduct  of  the  co-parmership  business, 
yet  it  seems  that  such  action  at  law  might  be  su.stuine<l,  upon  the  co-partnership 
articles,  to  enforce  express  stipulations  by  one  to  the  otherg.  Robinson  t.  Mc- 
intosh, 3  E.  D.  Smith  (N.  Y.)  221. 

821  See  ante,  p.  304. 

822  ALABAMA:  Code  188G,  §  1719.  ARKANSAS:  Sand.  &  H.  Dig.  1894, 
§  54(51.  CALIFORNIA:  Civ.  Code  18SG,  i  24"J2.  COLORADO:  Mills'  Ann. 
St.  IS'Jl.  §  3380.  CONNECTICUT:  Gen.  St.  1888.  §  3284.  ■  DAKOTA:  Comp. 
Laws  1887,  §  4085.  DELAWARE:  Rev.  Code  1893,  c.  04,  §  7.  DISTRICT 
OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §§  18.  20.  FLORIDA:  McClel.  Dig. 
1881,  c.  ir.9,  §  10.  CEORGIA:  Code  1882,  §  1933.  IDAHO:  Rev.  St.  1887, 
§3282.     ILLINOIS:    2  Starr  &  C.  Ann.  St.  1890,  c.  84.  §  17.     INDIANA:     Rev.  St. 

1894,  §  8119.  IOWA:  McClaiu's  Code  1888,  §  3343.  KANSAS:  Gen.  St. 
1889,  par.  3995.  KENTUCKY:  St  181M,  c.  94.  §  3778.  MAINE:  Rev.  St. 
188;j,  c.  33.  §  8.  MARYLAND:  Rev.  Code  1888,  art.  73,  §  19.  MASSACHU- 
SETTS: rub.  St.  1882,  c.  75,  §  0.  MICHIGAN:  How.  Ann.  St.  1882,  i  235S. 
MINNESOTA:  Gen.  St  1S94.  §  2343.  MISSISSII'PI:  Code  1892,  §  2778. 
MISSOURI:  Rev.  St  1889,  §  7200.  MONTANA:  Civ.  Code  1895,  §  3313. 
NEBRASKA:  Comp.  St  1893,  c.  65,  §  14.  NEVADA:  Gen.  St.  1885,  §  4915. 
NEW  HAMPSHIRE:    Pub.  St   1891,  c.  122.  §  U.     NEW  JERSEY:    Gen.   St 

1895,  "Paniiership,"  §  14,  NEW  YORK:  Rev.  St.  (9th  Ed.)  pt  2,  c.  4,  tit  1, 
§  14.  NORTH  CAROLINA:  Code  1883,  §  310L  NORTH  DAKOTA:  Rev. 
Co<le  1S!»5.  §  4429.  OHIO:  Rev.  St  1892,  §  3161.  OREGON:  2  Hill's  Ann. 
I^ws  1892.  §  3855.  PENNSYLVANIA:  Pepper  &  L.  Dig.  1894,  "Limited  Part- 
nership," §  20.      RHODE  ISLAND:      Gen.  Laws  1890.  c.  157.  §  12.     That  a  sur- 


§    2o0)  ACTIONS BETWEEN    FIRM    AND    THIRD    PERSONS.  495 

statute  provides  that  the  special  partners  shall  be  deemed  general 
partners,  and  that  special  partnerships  shall  be  deemed  general 
partnerships,  the  special  partners  may  join  or  be  joined.'"  In 
most  states  such  joinder  is  optional."*  So,  in  a  number  of  states, 
where  it  is  sought  to  hold  the  special  partner  liable  for  sums  with- 

viving  general  partner  cannot  be  sued  jointly  with  the  executor  of  a  deceased 
special  partner,  see  Richter  v.  Poppenhausen,  42  N.  Y.  373.  The  provision  of  the 
statute  that  suits  in  relation  to  the  business  of  a  limited  partnership  "may  be 
brought  and  conducted  by  and  against  the  general  partners,  in  the  same  manner  as 
if  there  were  no  special  partners,"  must  be  construed  to  mean,  not  only  that  they 
may  be  thus  brought  "in  the  same  manr.er,"  but  "with  the  same  effect."  Artisans' 
Bank  v.  Tread  well.  34  Barb.  (N.  Y.)  553.  A  judgment  against  a  limited  partnei^ 
ship,  on  which  execution  was  returned  unsatisfied,  will  not  estop  plaintiff  from 
suing  the  members  on  the  ground  that  they  are  liable  as  general  partners,  because 
the  law  providing  for  the  formation  of  limitfd  partnerships  was  not  complied  with. 
Sheble  v.  Strong,  128  Pa.  St.  315,  18  AU.  3^7. 

828  COLORADO:  Mills'  Ann.  St  1891,  §  3380.  CONNECTICUT:  Gen.  St. 
1888,  §  3284.  DELAWARE:  Rev.  Code  1S»3,  c  64,  §  7.  DISTRICT  OF  CO- 
LUMBIA: Comp.  St.  181>4,  c.  43,  §§  18,  20.  FLORIDA:  McClel.  Dig.  1881, 
c.  159.  §  10.  GEORGIA:  Code  1SS2.  §  1933.  ILLINOIS:  2  Starr  &  C.  Ann. 
St  1896,  c.  &4,  §  17.  INDIANA:  Rev.  St  1894,  §  8119.  KENTUCKY:  St 
1894,  c.  94,  §  3778.  MAINE:  Rev.  St  1883,  c.  33.  §  8.  MARYLAND:  Code 
1888,  art.  73.  §  19.  MASSACHUSETIS:  Pub.  St  1882,  c.  75,  §  9.  MICH 
IGAN:  How.  Ann.  St.  1882,  §  2358.  MINNESOTA:  Gen.  St  1894,  §  2343. 
SOUTH  CAROLINA:  Rev.  St.  1893.  §  1420.  TENNESSEE:  Mill.  &  V.  Codo 
18S4,  §  2412.  TEXAS:  Rev.  St  1895,  art  3596.  UTAH:  Comp.  Laws  1888, 
§  24SG.  VERMONT:  St  IS'.M.  §  4264.  VIRGINIA:  Code  1887,  §  2870. 
WASHINGTON:  Gen.  St  1891,  §  2924.  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  12.  WISCONSIN:  Sanb.  &  B.  Ann.  St  1889,  §  1718.  WYOMING: 
Rev.  St.  1887,  §  4081.  Cf.  Howland  v,  Bethune,  13  U.  C.  Q.  B.  270.  MISSIS- 
SIPPI: Code  1892,  §  2778.  MISSOURI:  Rev.  St  1 889.  §  7206.  MONTANA: 
Rev.  St.  1879,  div.  5,  §  952.  NEVADA:  Gem  St  1885,  §  4915.  NEW  HAMl'- 
SHIRE:  Pub.  St  1891,  c.  122.  §  11.  OHIO:  Rev.  St  1892.  §  316L  ORE- 
GON: 2  HUl's  Ann.  Laws  1892.  §  3855.  RHODE  ISLAND:  Gen.  Laws  189t;. 
c.  157.  §  12.  SOUTH  CAROLINA:  Rev.  St  1893.  §§  1420.  1431.  VERMONT: 
St  1894,  §  4284.  VIRGINIA:  Code  1887,  §  2876.  WASHINGTON:  Gen. 
St  1891,  §  2924.  WEST  VIRGINIA:  Code  1891,  c.  100.  §  12.  When  a  lim- 
ited partnership  expires,  the  partners  become  general  partners  if  the  business  is 
continued;  and  therefore,  where  articles  of  limited  partnership  had  expired,  it 
was  proper  to  bring  an  action  in  the  name  of  the  individual  partners,  and  not  in 
the  name  of  the  partnership.  Sarmiento  v.  The  Catherine  C.  (Mich.)  67  N.  W. 
1085. 

•  24  COLORADO:      Mills'   Ann.  St  1891.  §  3380.      DELAWARE:      Rev.   Code 


496  LIMITED    PARTNEBSHIP3.  (Ch.    10 

drawn,  it  is  provided  that  he  may  be  joined.'"  In  Mississippi, 
suits  may  also  be  brought  against  all  the  partners,  general  or  spe- 
cial, without  discrimination,  and  the  latter  may  plead  separately; 
or  any  special  partner  may  be  sued  separately."*  The  provision 
authorizing  actions  against  the  general  partners  alone  does  not  ap- 
ply, of  course,  where  it  is  sought  to  hold  the  special  partner  liable 
generally,  even  in  the  absence  of  the  specific  provisions  above  not- 
ed.^"     So,  where  the  suit  seeks  the  subversion  of  the  partnership, 

1 803.  c.  &i,  §  7.  DISTRICT  OF  COLUMBIA:  Comp.  St.  1894,  c.  43,  §§  18,  26. 
^-LORIDA:  McClel.  Dig.  1881,  c.  159.  §  10.  GEORGIA:  Code  1882,  §  1933: 
ILLINOIS:  2  Starr  &  C.  Ann.  St.  1896,  c  84,  §  17.  INDIANA:  Rev.  St.  1894. 
§  8119.  KENTUCKY:  St.  1894.  c.  94,  §  3778.  MAINE:  Rev.  St,  1883,  c.  33. 
§  8.  MARYLAND:  Rev.  Code  18S8,  art.  73,  S  19.  MASSACHUSETTS:  Pub. 
St.  1882,  c.  75,  §  9.  MICHIGAN:  How.  Ann.  St.  1882.  §  2358.  MINNESOTA: 
Gen.  St.  1894,  §  2343.  MISSISSIPPI:  Code  1892,  §  2778.  MISSOURI:  Rev. 
St.  1889,  §  7206.  MONTANA:  Rev.  St.  1879,  div.  5,  §  952.  NEVADA:  Gen. 
St  1885,  §  4915.  NEW  HAMPSHIRE:  Pub.  St.  1891,  c  122,  §  11.  OHIO: 
Rev.  St.  1892,  §  31G1.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157,  S  12. 
SOUTH  CAROLINA:  Rev.  St  1893,  §§  1420.  1431.  VERMONT:  St  1894. 
§  4284.  VIRGINIA:  Code  1887.  §  2876.  WEST  VIRGINIA:  Code  1891,  c. 
100,  §  12. 

826  COLORADO:  Mills'  Ann.  St  1891,  {  3380.  DELAWARE:  Rev.  Code 
1893,  c.  &4,  §  7.  GEORGIA:  Code  1882,  §  1933.  ILLINOIS:  2  Starr  &  C. 
Ann.  St  1896,  c  84,  §  17.  INDIANA:  Rev.  St  1894,  §  8119.  MARYLAND: 
Code  1888,  art.  73,  S  19.  MASSACHUSETTS:  Pub.  St  1882,  c.  75,  §  9. 
MICHIGAN:  How.  Ann.  St.  1882,  §  2358.  MINNESOTA:  Gen.  St  1894,  § 
2343.  MONTANA:  Rev.  St  1879,  div.  5,  §  952.  NEVADA:  Gen.  St  1885, 
§  4915.  NEW  HAMPSHIRE:  Pub.  St.  1891,  c  122,  §  7.  OREGON:  2 
HiU'8  Ann.  Laws  1892,  §  3855.  RHODE  ISLAND:  Gen.  Laws  1896,  c.  157. 
§  12.  VERMONT:  St.  1894,  §  4284.  WASHINGTON:  Gen.  St  1891,  {  2924. 
Where  a  defendant,  sued  as  a  surviving  general  partner,  alleges  in  his  answer, 
by  way  of  avoidance,  that  the  partnership  was  a  limited  one,  formed  aa  prescribed 
by  statute,  plaintiffs  should  reply,  and  point  out  the  specific  violation  of  the  stat- 
ute on  which  they  rely  tD  charge  defendant  as  a  general  partner.  Williams  v.  Kil- 
patrick,  21  Abb.  N.  C.  61.  Where,  in  an  action  seeking  to  charge  a  special  partner 
as  a  general  partner,  it  appears  from  plaintiCTs  allegations  and  proofs  that  a  limit- 
ed partnership  was  duly  formed,  the  burden  is  upon  plaintifE  to  show  the  facts 
rendering  defendant  liable  as  a  general  partner,  and  defendant  need  not  aflanna- 
tively  prove  the  due  formation  of  the  partnership,  or  subsequent  compliance  with 
the  law.  Continental  Nat  Bank  of  Boston  v.  Strauss  (Super.  N.  Y.)  17  N.  Y. 
Supp.  188,  affirmed  137  N.  Y.  148,  553,  32  N.  E.  1066. 

32  6  Code  1892,  §  2779. 

827  Schultea  v.  Lord,  4  E.  D.  Smith  (N.  Y.)  206;    Artisans'  Bank  t.  Treadwell. 


f    230)  ACTIONS BETWEEN    FIRM    AND    THIBD    PEESOKB.  497 

the  special  partners  must  be  joined.  In  both  cases  the  special  part- 
ner has  a  right  to  be  heard.  'It  seems  to  be  giving  an  unreason- 
able latitude  of  construction  to  the  words,  'Suits  in  relation  to  the 
business  of  the  partnership  mar  be  by  or  against  the  general  part 
ners/  to  apply  them  to  a  suit  brought  for  the  subversion  of  the  part 
nership."  ^^*  Accordingly,  a  special  partner  is  a  necessary  party 
to  an  action  by  a  partner  or  creditor  for  a  dissolution,  a  receiver, 
and  an  accounting."*  The  above  statutory  provisions  do  not  ap 
ply  to  actions  between  the  partners."** 

34  Barb.  (N.  Y.)  553;  Haggerty  t.  Taylor,  10  Paige  (N.  Y.)  261,  Under  1  Rev. 
St.  p.  765,  I  8,  providing  that,  if  the  contribution  by  the  special  partner  is  not 
paid  in  cash,  "all  the  persons  interested  in  such  partnership  shall  be  liable  for  all 
the  engagement*  thereof  as  general  partners,"  the  liability  of  a  special  partner 
survives  after  his  death.  First  Nat.  Bank  of  Jersey  City  v.  Huber,  75  Hun,  80, 
26  N.  Y.  Supp.  9G1. 

3  28  Schulten  v.  Lord,  4  E.  D.  Smith  (N.  Y.)  206,  208. 

829  Walkenshaw  v.  Perzel,  32  How.  Prac.  (N.  Y.)  233;   Schulten  v.  Lord,  4  E.  D. 
Smith  (N.  Y.)  206;   McArthur  v.  Chase,  13  Grat.  (Va.)  683. 

8  30  See   Spalding  t.  Black,  22   Kan.   63.    A   member  of  a  limited   partnership 
may  sue  the  firm  on  a  note  indorsed  by  it.    MacGeorge  ▼.  Manufacturing  Co.,  141 
Pa.  St  575,  21  AU,  671. 
QEO.PART.-S2 


498  JOIKT-BTOCK   C0MPA^^IE8.  (Ch.   11 

CHAPTER   XI. 
JOINT-STOCK  COilPANIBS. 

231.  In  General. 

232.  Transfer  of  Shares. 

.233-234.  Powers  of  Members  and  OflBcers. 

235-236.  Rights  and  Liabilities  of  Members  inter  Se. 

237.  Liability  of  Members  to  Third  Persons. 

238-239.  Actions  by  and  against  Joint-Stock  Companiea. 

240.  Dissolution  of  Joint-Stock  Compauiea. 

IN  GENERAL 

231.  Joint-stock  companies   are    associations    intermediate 

between  partnerships  and  corporations.     They  may 
exist  at  common  law  or  under  local  statutes. 

TRANSFER  OF  SHARES. 

232.  The  share  of  a  member  of  a  joint-stock  company  may 

be  transferred  subject   to   the  following  conditions, 
inter  alia: 

(a)  Transfer  does  not  dissolve  the  company. 

(b)  The  assignee  becomes  a  partner  without  the  consent 

of  the  company  unless  otherwise  provided. 

(c)  The  retiring  member  must  give  notice   to  terminate 

his  liability. 

The  essential  feature  of  a  joint-stock  company  is  the  absence  of 
the  delectus  personae.  The  capital  of  such  associations  is  divided 
into  shares  which  are  transferable,  and  the  transfer  of  one  member's 
share  or  part  of  it  does  not  dissolve  the  partnership.  Usually,  the 
transferee  is  entitled  to  admission  into  the  company  without  the 
consent  of  the  other  members.  But  the  articles  of  association  may 
be  so  drawn  that  the  consent  of  the  members  or  the  directors  is  nec- 
essary to  entitle  the  transferee  to  particiitate  in   the  management 


§§  233-234)  POWERS  or  members  and  officers.  499 

of  the  company.     In  such  case,  if  consent  was  not  given,  the  trans- 
feree can  still  claim  his  share  of  the  profits. * 

The  transfer  by  a  member  of  all  his  sharer  does  not  relieve  him  of 
liability  for  the  existing  liabilities  of  the  association,  nor  for  obliga- 
tions subsequently  incurred,  unless  he  gives  notice  of  his  retirement 
from  the  company.'  The  same  principles  apply  here  as  in  cases  of 
ordinary  partnerships  where  a  partner  retires.^  The  incoming  mem- 
ber is  not  liable  for  debts  existing  at  the  time  he  becomes  a  member 
unless  he  expressly  assumes  them.*  Jomt-stock  companies,  with 
transferable  shares,  are  legal  at  common  law.^  The  English  "Bub- 
ble Act,"  •  which  prohibited  joint-stock  companies,  has  been  held 
never  to  have  been  in  force  in  this  country.^  Although  certain  for- 
malities may  be  required  by  the  articles  of  association  for  the  trans- 
fer of  a  share,  such  as  a  certificate  in  writing  filed  with  the  secretary, 
an  assignment  without  these  formalities  is.  nevertheless,  valid  and 
sufficient  to  transfer  the  assignor's  interest.' 

POWERS  OF  MEMBERS  AND  OFFICERS. 

233.  Members    of   a  joint-stock    company  have   the   same 

powers  as  members  of  an  ordinary  partnership. 

234.  When  the  business  of  a  joint-stock  company  is   man- 

aged by  of&cers,  these  officers  have  the  ordinary 
powers  of  partners,  in  the  absence  of  restriction 
brought  to  the  notice  of  the  persons  dealing  with 
the  company. 

The  mere  fact  that  the  shares  of  the  members  of  a  joint-stock 
company  are  transferable  does  not  allfCt  the  powers  of  the  mem- 
bers to  conduct  the  business  like  ordinary  partners,  and  to  bind  the 

1  Kingman  v.  Spurr.  7  Pick.  (Mass.)  235;  Harper  v.  Raymond.  3  Bosw.  (N. 
Y.)  29. 

2  Tyrrell  v.  Washburn,  6  Allen  (Mass.)  4G6;  Tenney  v.  Protective  Union.  37 
Vt.  64.     But  see  Bodey  ▼.  Cooper,  82  Md.  625,  34  Atl.  362. 

«  See  ante,  p.  201. 

*  Lake  v.  Munford,  4  Smedes  &  M.   (Miss.)  312. 

6  Pliillips  V.  Blatchford,  137  Mass.  510.     t  Phillips  v.  Blatchford,  137  Maea.  510. 

•  6  Geo.  I.  c.  18.  8  Alvord  v.  Smith,  5  Pick.  (Mass.)  232. 


'^OO  JOINT-STOCK    COMPANIES.  (Ch.    11 

company  by  their  acts  and  contracts.  When  the  members  of  a  joint- 
stock  company  are  numerous,  and  the  articles  provide  for  the  carry- 
ing on  of  the  afifairs  of  the  company  by  means  of  officers,  the  officers 
have  such  implied  powers  as  partners  have."  But  an  officer  would 
have  no  power  to  execute  sealed  instruments  for  the  company,^" 
unless  he  was  specially  authorized  to  do  so.  In  this  or  in  any  other 
case  the  articles  of  association  might  confer  more  extensive  powers 
on  the  officers  than  those  implied  by  law,  or  they  might  impose  re- 
strictions, but  such  restrictions  would  not  affect  persons  having  no 
notice  of  them.^^  The  powers  of  members  of  joint-stock  companies 
which  are  managed  by  officers  are  practically  the  same  as  those  of 
stockholders  of  corporations.  The  members  of  such  companies  have 
no  implied  power  to  act  for  the  company.^' 

RIGHTS  AND  LIABILITIES  OF  MEMBERS  INTER  SE. 

235.  The  rights  and  liabilities  inter  se  of  members  of  joint- 

stock  companies  are  the  same  as  in  an  ordinary  part- 
nership, in  the  absence  of  changes  introduced  by 
the  articles  of  association. 

236.  A  member  is  not  entitled  to  compensation  from  the 

company  'without  a  special  agreement. 

Articles  of  partnership  which  make  the  shares  transferable  do 
not  by  that  alone  affect  the  rights  and  liabilities  of  the  members 
to  each  other.  If  the  articles  do  not  provide  for  the  division  of 
profits  and  losses,  the  rules  of  ordinary  partnerships  apply.^*      So, 

»  Van  Aernam  v.  Bleistein,  102  N.  Y.  355,  7  N.  E.  537;  Bodwell  v.  Eastman, 
106  Mass.  525;  Tappan  v.  Bailey,  4  Mete.  (Mass.)  529;  Batty  v.  Adams  Co.,  16 
Neb.  44,  20  N.  W.  15;  Cameron  v.  Bank  (Tex.  Civ.  App.)  34  S.  W.  178.  A  sale 
of  the  company's  whole  property  would  be  ultra  vires.  Carter  v.  Oil  Co.,  104  Pa. 
St.  463,  30  Atl.  391. 

10  Skinner  v.  Dayton,  19  Johns.  (N.  Y.)  513. 

11  See  ante,  p.  215.  Cf.  Park  Bros.  &  Co.  v.  Harwi,  2  Kan.  App.  629,  42  Pac. 
©39;  Interstate  Mut.  Fire  Ins.  Co.  v.  Brownback,  1  Pa.  Super.  Ct.  183. 

12  Pittsburgh  Melting  Co.  v.  Reese,  118  Pa.  St.  355,  12  Atl.  3G2;  Greenwood'a 
Case,  3  De  Gex,  M.  &  G.  459. 

18  See  ante,  p.  138,  and  Kellogg  Bridge  Co.  v.  U.  S.,  15  Ct.  CI.  111. 


§    237)  LIABILITY    OF   MEMBERS    TO    THIRD    PERSONS.  501 

too,  as  to  other  rights  and  liabilities.^*  The  managing  partners  or 
oflBcers  must  conduct  the  affairs  of  the  company  in  the  utmost  good 
faith. ^°  They  are  not  entitled  to  any  compensation  beyond  their 
share  in  the  profits  of  the  business,  unless  there  is  an  agreement  to 
that  effect." 

LIABILITY  OP  MEMBERS  TO  THIRD  PERSONS. 

237.  The  members  of  joint-stock  associations  are  liable  for 
the  -whole  amount  of  the  indebtedness  of  the  com- 
pany. Statutes  in  some  states  create  partnership 
associations  -with  limited  liability. 

The  liability  in  solido  which  has  been  seen  to  be  a  feature  of  part- 
nerships ^^  applies  to  joint-stock  companies  as  well.  Each  mem- 
ber of  such  a  company  is  personally  liable  for  the  whole  amount  of 
the  company's  obligations.^*  In  some  states  statutes  provide  for 
the  formation  of  joint-stock  companies  with  limited  liability  of  the 
members."  These  companies  are  usually  termed  "partnership  asso- 
ciations, limited"  Similar  companies  with  limited  liability  are 
common  in  England,  and  are  called  "joint-stock  companies";  but 
the  addition  of  a  limitation  on  liability  to  a  company  having  trans- 
ferable shares  makes  an  association  more  closely  related  to  a  cor- 

!♦  As  to  forfeiture  of  a  share,  see  Walker  v.  Ogden,  1  Biss.  287,  Fed.  Cas.  No. 
17,081;    Morris  v.  Land  Co.,  164  Pa.  St  326,  30  Atl.  240. 

IB  In  re  Fry,  4  Phila.  (Pa.)  129. 

18  In  re  Fry,  4  Phila.  (Pa.)  129;  Holmes  v,  Higgins,  1  Barn.  &  C.  74.  But  see 
Spence  v.  Whitaker,  3  Port.  (Ala.)  297. 

17  Ante,  p.  249. 

18  Tappan  v.  Bailey,  4  Mete.  (Mass.)  529;  Whitman  v.  Porter,  107  Mass.  522; 
Taft  v.  Ward,  106  Mass.  518,  111  Mass.  518,  522;  Hodgson  t.  Baldwin,  65  111. 
532;  First  Nat.  Bank  of  Green  Bay  v.  Goff,  31  Wis.  77;  Gorman  v,  Russell,  14 
Cal.  531;  Savage  v.  Putnam,  32  Barb.  (N.  Y.)  420;  Holt  v.  Blake,  47  Me.  62; 
Greenup  v.  Barbee's  Ex'r,  1  Bibb  (Ky.)  320;  Cameron  v.  Bank  (Tex.  Civ.  App.) 
34  S.  W.  178.  For  an  unsuccessful  attempt  to  limit  liability  by  contract,  see  Hess 
V.  Werts,  4  Serg.  &  R.  (Pa.)  356.  But  the  estate  of  a  deceased  member  is  not 
liable  for  debts  contracted  after  his  death.  Bodey  v.  Cooper,  82  Md.  625,  34  Atl, 
362. 

18  Bates,  Lim.  Fartn.  §  208  et  seq.  See  Robbins  Electric  Co,  t.  Weber,  172  Pa. 
St.  635,  34  AU.  116. 


502  JOINT-STOCK    COMPANIES.  (Ch.    11 

poration  than  to  a  partnership,^"  and,  as  such,  not  properly  within 
the  scope  of  this  worli. 

ACTIONS  BY  AND  AGAINST  JOINT-STOCK  COMPANIES. 

238.  In  the  absence   of  statutes,  actions   must  be  brought 

by  and  against  joint-stock  companies  in  the  same 
manner  as  actions  by  and  against  ordinary  partner- 
ships. 

239.  In  some  states,  statutes  provide  that  such  a  company 

may  be  sued  in  its  o-wn  nane  or  in  the  name  of 
some  ofBcer. 

Where  there  are  no  statutes  making  provision  for  joint-stock 
companies,  the  rules  as  to  actions  by  and  against  partnerships  al 
ready  discussed  apply.'^  In  actions  by  a  joint-stock  company,  all 
the  members  must  be  joined  as  parties  plaintiff;  and  in  actions 
against  such  a  company  all  the  partners  must  be  made  defendants, 
or  those  who  are  sued  can  prove  a  nonjoinder, '*'  In  a  number  of 
states,  however,  there  are  statutory  provisions  to  the  effect  that  a 
joint-stock  company  may  be  treated  as  a  person  in  the  courts,  and 
allowed  to  sue  or  be  sued  in  its  own  name,  or  in  the  name  of  sonic 
officer,  usually  the  president  or  treasurer."  These  statutes  gen 
erally  contain  another  provision  to  the  effect  that  the  property  of 
the  company  shall  be  first  exhausted,  before  resort  is  had  to  the 
individual  property  of  the  members.  Under  statutes  of  this  kind, 
joint-stock  companies  become  very  much  like  corporations,  and  the 

20  Liverpool  Ins.  Co.  t.  Massachusetts,  10  Wall.  566. 

21  Aute,  p.  oG2. 

22  Birniingham  v.  Gallagher,  112  Mass.  190;  Kingsland  t.  Bralsted,  2  Lans. 
(N.  Y.)  17;  Niven  v.  Spickerman,  12  Johns.  (N.  Y.)  401;  Chick  v.  Trevett,  20  Me. 
462;    McGreary  v.  Chandler,  58  Me.  537. 

2  3  New  York:  Code  Civ.  Proc.  §§  1919-1922.  Wisconsin:  Sanb.  &  B.  Ann.  St. 
1889,  §  3210.  Cf.  Adams  Exp.  Co.  v.  State  (Ohio  Sup.)  44  N.  E.  506.  In  some 
states  however,  companies  organized  under  such  statutes  in  another  jurisdiction 
are  required  to  sue  or  be  sued  ns  partnerships.  Taft  t.  Ward,  106  Mass.  518; 
Gott  V.  Dinsmore,  111  Mass.  45.  But  see  Edgewortb  t.  Wood  (N.  J.  Sup.)  88 
All.  d4a 


§   240)  DISSOLUTION   OF   JOINT-STOCK    COMPANIES.  503 

rules  gOTerning  actions  by  and  against  corporations  are  in  a  large 
measure  applicable.  This  is  especially  true  in  actions  between  the 
company  and  one  of  its  members.**  But  between  the  individual 
members  of  a  joint-stock  company  the  usual  rules  as  to  actions  be- 
tween partners  are  applicable.'" 

DISSOLUTION  OF  JOINT-STOCK  COMPANIES. 

240.  Joint-Stock  companies  are  dissolved  in  the  follo"sving 
"ways: 

(a)  By  mutual  consent. 

(b)  By  decree  of  a  court  of  equity. 

Inasmuch  as  joint-stock  companies  in  their  usual  form  hare  no 
delectus  personarum,  the  causes  which  dissolve  an  ordinary  partner- 
ship because  of  that  principle  '^  do  not  dissolve  a  joint-stock  com- 
pany. Thus,  it  is  usually  provided  in  the  articles  of  association 
that  the  death  of  a  member  shall  not  cause  a  dissolution,-^  nor  the 
transfer  of  a  share.*'  The  termination  of  the  company  may  be  pro- 
vided for  in  the  articles  of  association;  and,  when  this  is  the  case, 
the  company  is  dissolved  in  the  manner  and  at  the  time  agreed  up- 
on." The  members  of  a  joint-stock  company  may,  of  course,  dis- 
solve the  company  by  mutual  cofisent;  and  an  abandonment  of  the 
business  may  amount  to  a  dissolution. '°  A  court  of  equity  may 
decree  the  dissolution  of  a  joint-stock  company  *^  where  the  object 

2*  Fargo  V.  McVicker.  56  Barb.  (N.  Y.)  437;  Waterbury  t.  Express  Co.,  50 
Barb.  (N.  Y.)  157. 

2B  Se«  Butterfield  v.  Beardsley,  28  Mich.  412;  Morrissey  v.  Weed,  12  Ilun  (N. 
V.)  491;   Crater  v.  Biniuger,  45  N.  Y.  545;    McMabon  v.  Rauhr,  47  N.  Y.  67, 

2  8  See  ante,  p.  396. 

2T  Phillips  V.  Blatchford,  137  Mass.  510;  Walker  v.  Wait,  50  Vt,  668;  Mc- 
Neish  V.  Oak  Co.,  57  Vt.  316;    Tenney  v.  Protective  Union,  37  Vt.  64. 

2  8  Kahn  v.  Smelting  Co.,  102  U.  S.  641;  Skillman  v.  Lachman,  23  Cal.  199; 
Taylor  v.  Castle,  42  CaL  367;  Settembre  v.  Putnam,  30  Cal.  490;  Durjea  v. 
Burt,  28  Cal.  569. 

29  Mann  v.  Butler,  2  Barb,  Ch.  (N.  Y.)  362.  Cf.  Lake  v.  Munford,  4  Smedes 
&  M.  (Miss.)  312. 

80  Allen  V.  Clark,  65  Barb.  (N.  Y.)  563;    Hewett  v.  Hatch,  57  Vt.  16. 

81  As  to  the  power  of  one  or  more  members  to  institute  proceedings  for  a  disso- 
lution, see  Snyder  t.  Lindsey  (Sup.)  36  N.  Y.  Supp.  1037. 


504  JOINT-STOCK    COMPANIES.  (Ch.    11 

of  the  organization  has  been  abandoned,"  or  has  become  impossi- 
ble; "  but  the  mismanagement  of  the  directors  or  trustees  of  sueh 
a  company  is  not  cause  for  a  decree  of  dissolution.** 

»2  Burke  t.  Roper,  79  Ala.  138. 

•  «  Von  Schmidt  r.  Huntington,  1  Cal.  B8w 

•*  Waterbury  t.  Express  Co.,  50  Barb.  (N.  T.)  157. 


TABLE  OF  CASES  CITED. 


[THE    FIGURES    REFER    TO    PAGES.J 


Abbot  V.  Johnson.  150,  VJi,  405. 
Abel  v.  Sutton,  259. 
Abell,  Kx  parte,  nyi. 
Abendrotb  v.    Van  Dolsen,  459. 
Ackerman,  Kx  parte.  I'D!. 
Ackley  v.  Staelilln,  ayo,  aui. 
Adam  V.  Musson,  43a. 

V.  Townend,  217. 
Adams  V.  Adams,  lUWL 

V.  Beall,  12,  13. 

V.  Carter,  43,  tw. 

V.  l<'unk,  32U,  321. 

V.  May,  24t). 

V.  Shewalter,  334. 

V.  Sturges,  2y2. 
Adams  Kxp.  Co.  v.  State,  502. 
Addams  v.  Tutton,  31i». 
Addison  V.  Candasequl,  376. 

V.  (Jverend,  371. 
Adler  V.  Foster,  23U. 
Adley  V.   Wbitstable  Co.,  187. 
A.etna  Ins.  Co.  v.  Bank,  60,  131,  273. 

V.  Feck.  270. 
Agar  V.  Mack  lew,  209. 
Algen  V.  Railroad  Co.,  6«. 
Alrey  v.  Borham,  10,  167. 
Akhurst  v.  Jackson,  10,  202. 
Alabama  Fertilizer  Co.   v.   Reynolds, 

17,  219.   231. 
Alder  v.  Fouracre,  339,  348. 
Alderson  v.  Pope,  85,  87,  95,  375. 
Aldrich  v.  Lewis.  320. 
Aldrldge  v.  Aldrldge.  117,  41L 
Alexander  v.  Alexander,  318. 

V.  Slmms,  li^. 
Allan  V.  Garven,  317. 
Allcott  V.  Strong,  2«7. 
Allegheny  Nat.  Bank  v.  Bailey,  460. 
AUeman  v.  Reagan's  Adm'r,  294. 
GEO.  PART, 


Allen,  In  re,  443. 

V.  Anderson,  304. 

V.  Center  Valley  Co.,  181,  28a 

V.  Cheever,   219. 

y.  Clark,  503. 

V.  Davis.  66. 

V.  Hawley,  357. 

V.  Kllbre.  348. 

V.  Owens,  249. 

V.  Smelting  Co.,  267. 

V.  Valley  Co.,  130. 

V.  Wells,  284,  292,  29«. 

V.  Withrow,  127,  128. 
Alliance  Bank  v.  Kearsley,  22L 
Allison  V.  PeiTy,  21,  22. 
Alloway  v.   Bralne,  330. 
Alvord  V.  Smith,  499. 
Ambler  v.  Bolton,  203. 

V.  Whipple,  187,  332,  339. 
American    Credit    Indemnity    Co.    t. 

Wood,  31. 
Ames  V.  Downing,  419,  488. 
Amldown  v.  Osgood,  261,  262. 
Amslnck  v.   Bean,  281,  288,  294,  295, 

401,  410. 
Anderson  v.  Anderson,  327. 

V.  Lemon,   162. 

V.  Levan,  223,  272. 

y.  Powell.  29. 

y.  Stone,   465. 

V.  Wallace.  349. 
Anderson's  Adm'r  v.  Whltlock,  28. 
Andrews,   Ex  parte,  282,  295. 

y.  Alexander,  24. 

V.  Andrews,  171. 

y.  Mann.   183. 

y.  Schott.   471. 
Andrews'    Heirs    y.    Brown's   Adm'r, 

126. 
Anon.,  219,  349,  405. 
Ansell  V.  Waterhouse,  378, 
(505) 


506 


CASES    CITED. 


[The  figures  refer  to  pages.] 


Apperly  y.  Page,  342. 
Appleby   v.   Brown.  334. 
A-ppelton  V.  Binks,  376. 
Apsey,  Ex  parte,  241. 
Argall  V.  Smith.  422,  423,  444. 
Armstrong  v.  Hussey,  265. 

V.  Potter,  31. 
Arnold  v.  Arnold,  316. 

V.  Brown,  233.  4^0.  403. 

V.  Dauziger.  453. 

V.  Nichols.  255. 

V.  Walnwright,  181. 
Arthur  v.  Weston,  126. 
Artisans'  Bank  v.  Treadwell.  482,  495, 

496. 
Artman  v.  Fergu.'^dn.  15. 
ABh  V.  Gule.  24. 
Ashbrook  v.  Ashbrook.  170. 
Ashby  V.  Shaw,  (30,  61. 
Ashhurst  v.  Mason.  175. 
Ashworth  v.   Stanwl.K.  243. 
Askew  7.  Silmnn.  2.">9. 
Asplnwall  v.  Knihvay  Co..  224,  404. 
Astle  V.  Wright,  20. 
Atherton  v.   Whitcomb,  170. 
Atkins.  Ex  parte,  2S3. 

V.  Hunt,  68.  70. 

V.  Saxtf)n.  VU.  14:i,  145.  278. 
Atlantic  State  Bank  v.  Savery.  226. 
Atlas  Nat.  Bank  v.  Savery,  '_'!!•;.  •J'J7. 
Attorney  General  v.  State  Bank,  343. 
Atwood   V.    Lockhart.  240. 

V.  Maude,  20. 
Aubert  v.  Maze,  26,  176. 
Aubln  V.  Holt.  34.*;. 
Aultman  <fc  Taylor  Co.  v.  Shelton,  230. 
Aurora  State  Bank  v.  OllTer.  16. 
Au.sten  v.  Boys,  412. 
Austin  V.  Appling,  244. 

V.  Holland,  260,  202,  264. 

▼.  Thomson,  24,  64. 

T.  Vaughan.  305. 

V.  Williams.  107. 
Aveling  V.  Knipe,  5. 
Avery  v.  Fisher,  233. 

B 

Babcock  v.  Standish,  278. 
Bacliurst  v.  Clinkard,  144,  145. 
Backliouse  v.  Charlton,  219. 
V.  Hall,  103. 


Backus  V.  Fobes,  270. 
Badeley  v.  Bank,  •">  '>.  *'/). 
Badger  v.  Daenicke,  MOa. 
Bagley  v.  Smith,  319. 
Bagot  V.  Easton,  333. 
Bailey  v.  Bancker,  387. 

V.  Clark,  215. 

V.  Ford,  354. 

V.  Starke,  320. 
Baily  v.  Horntbal,  281,  485. 
Baird  v.  Plauque.  85. 
Baker  v.  Mayo.  170. 

V.  Nachtrleb,  89. 

V.  Robin.son,  319. 

V.  Staeki)()ole,  267. 
Baker's  Appeal,  277. 
Baldwin  v.  Burrows,  681 

V.  Johnson.  22. 

V.  Tyues.  223. 

V.  Von  Miciieronx.  412. 
Ball  V.  Dunsterville.  223. 

V.  Farley,  114. 
Ballon  V.  Wood,  346. 
Bank  v.  Carrollton  Railroad,  184,  164-- 
156,  335. 

V.  Sawyer,  125. 
Bank  of  Ale.xaiidria  v.  Mandovllle.  228. 
Bank    of    British    North    America    v. 

Pelafleld,  302. 
Bank  of  Buffalo  v.  Thompson,  101. 
Bank  of  Commerce  v.  Selden,  230. 
Bank  of  Commonwealth  v.  Mudgett. 

260. 
Bank  of  England  Case,  124,  203. 
Bank  of  Ft.  .Madison  v.  Alden,  214. 
Bank  of  Cunterville  v.  Webb,  229. 
Bank  of  Lushton  v.  O.  S.  Kelley  Co.,  8, 
Bank  of  Mobile  v.  Andrews,  409. 
Bank  of  Montreal  v.  Pa;.:e,  219.  394. 
Bank  of  New  Orleans  v.   Matthews, 

402. 
Bank   of   New    York   v.    Vanderhorst, 

258. 
Bank  of  Rochester  v.  Monteath,  106. 
Bank  of  Scotland  v.  Christie,  104. 
Bank  of  State  of  North  Carolina  v. 

Fowle,  399. 
Banner  v.  Schlessinger,  243,  388. 
Banner  Tobacco  Co.  v.  Jenison,  214. 
Bannister  v.  Miller,  229,  278. 
Barber,  Ex  parte,  190,  194,  206. 

V.  Bank,  147. 


CASES    CITED. 


607 


[The  figures  refer  to  pages.) 


Bnrcroft  t.  Haworth.  219. 

V.  Sno(l<rra.ss.  279. 
Bard  well  v.  Perry.  28").  335. 
Barfoot  v.  Goodall,  2(^3. 
Baring  v."  Crafts,  112. 

V.  Lyman,  419. 
Barker  v.  (Joodair,  144. 

V.  Richardson,  224. 
Barkley  v.  Tapp,  398. 
Barklle  v,  Scott,  61. 
Barlow  v.  Myers.  256. 
Barnard  v.  Road  Co.,  215. 
Barnes  v.  Jones.  357.  360. 
Baroness  Wenlock   v.   River  Dee  Co., 

241. 
Barrett,  In  re,  222. 

V.  McKenzie.    149.   335. 

V.  Swann.  60. 
Barron   v.    Fitzgerald.   104. 
I'.arrow.  Ex  parte,  SO. 
Barrows  v.  Downs,  428,  457. 
f'.arry  v.  Brlggs.  410. 

V.  Foyles.  245. 

V.  Nesham.  36.  41. 
Bartlett  v.  .Jones,  121. 
Bass,  Ei  parte.  2'J4. 

V.  Olive.  103. 
Bassett  v.  Shepardson.  257,  401. 
Batchelder  v.  Althoimer,  481,  482. 
Bates  V.  Babcock,  21,  25. 

V.  Bank.  2t;8. 

V.  Lane.  319. 
Battaille  v.  Baitillle,  486.  404. 
Battley  v.  Lewis.  70,  198. 
Batty  V.  Adams  Co..  500. 
Baxter  v.  Bucliauan.  361. 

v.  West,  21,  354,  406, 
Beacannon  v.  Llobe,  311. 
Beach  v.  Hotchki.ss.  3<)4,  305. 
Beachara's     Assignees     v.     Eckford's 

Ex'rs,  171. 
Beale  v.  Caddlck,  219. 
Beam  v.  Macouiber.  16L 
Beardsley  v.  Tuttle.  214. 
Beatty  v.  Wray.  166.  laS. 
Beauchamp,  Ex  parte,  102. 
Beaumont  v.  Meredith,  24. 
Beauregard  v.  Case.  62. 
Beck  V.  Kantorowicz.  339. 
Beckham  v.  Drake.  39.  219. 
Beckwlth  v.  Mantou.  77. 
Bedford  v.  Brutton,  317. 


Bedford  v.  Deakln.  269. 

Beebe  v.  Rogers.  238. 

Beecham  v.  Dodd.  33. 

Beecher  v.  Bush.  3.  4.  32,  44,  47,  50. 

53,  61,  (>4,  235. 
Beede  v.  Eraser.  316,  322. 
Beekham  v.  Drake,  240. 
Beers  V.  Reynolds,  465,  466,  471,  489, 

491. 
Behrens  v.  McKenzie,  14. 
Belanger  v.  Dana,  409. 
Belcher  v.  Conner.  17. 
Bell.  Ex  parte,  2(). 

V.   Hudson.  329.  336. 

V.  Merritield.  467,  482. 

V.  Morrison.  261,  410. 
Bellairs  v.  Ebsworth,  103. 
Benient  v.  Maclilne  Co..  443. 
Benchley  v.  Cliapin.  249. 
Bender  v.  Henistreet,  234. 

v.  Markle,  409. 
P.enedict  v.  Van  Allen.  426. 
Benjamin  v.  Covert,  82.  26a 
Bennett  v.  Buchan.  410. 

V.  Smith,  302. 

V.  Wool  folk.  333. 
Benson  v.  IJadfield.  269. 
Bentley  v.  Bates,  155,  399. 

v.  Craven.  160,  163. 

V.  Harris.  335. 
Bentzen  v.  Zierlein,  223. 
Bcii'sford  V.  Browning.  246,  289. 
Bergeron  v.  Richardott,  125. 
Bergmann  v.  MacMillan,  15(5. 
Berguer    &    Engel    Brewing    Co.    r. 

Cubb,  4.52. 
Berkshire  Woolen  Co.  v.  Juillard,  105. 

238. 
Bernard  v.  Torrance,  262. 
Bernard  &  Leas  Manuf'g  Co.  ▼.  Pack- 
ard &  Calvin,  15.  429. 
Berrian.  In  re.  288. 
Berry  v.  Cross,  402. 
Berthold  v.  Goldsmith,  57,  63,  122. 
P.etts  V.  June,  1(!1. 
Beudel  v.  Hettrlck.  82. 
Bevan,  Ex  parte,  297. 

V.  Lewis,  348. 
Beveridge  v.  Beveridge,  159. 
Bfeuffer  v.  Maltby,  ;;:}(;. 
Bidwell  V.  Madison,  69. 
Blenenstok  v.  Ammldown,  242,  244. 


508 


CASES    CITED. 


[Tbe  figures  refer  to  pages.] 


Bjgelow,  In  re,  297. 
V.  Elliott,  31,  44. 
V.  Gregory,  73. 
Biggs  V.  Lawrence,  25. 
Blnford  v.  Dommett,  138. 
Bingham,  Ex  parte,  253. 

V.  Tuttle,  281. 
Bininger  v.  Clark,  108. 
Birchett  v.  Boiling,  77. 
Bird  V.  Morrison,  22. 
Birdsall  v.  Colie,  356,  357. 
Birmingham  v.  Gallagher,  502, 
Blsel  V.  Hobbs.  232. 
Bishop  V.  Georgeson,  83. 
V.  Hall,  82,  112,  365. 
Bissell  V.  Foss,  7,  155. 
V.  Railroad  Co.,  16. 
V.  Warde,  3,  80. 
Bixler  v.  Kre.sge,  12. 
Blacli  V.  Black,  128. 

V,  Long,  142. 
Blackburn  Building  Soc.  v.  Cunllffe, 

221,  229,  241. 
Black's  Appeal,  274. 
Black  well  v.  Clay  well,  400. 
Blain  V,  Agar,  337. 
BlaJr  V.  Suover,  322. 

V.  Wood,  385. 
Blake  V.  Dorgan,  395,  40a 

V.  Sweeting,  3lHj. 
Blakely  v.  Bennocke,  24. 
Blakeney  v.  Dufaur,  351.  36a 
Blauchard  v.  Coolidge,  121. 
Blasdell  v.  Souther,  195. 
Bllnn  V.  Evans,  228. 
Bllsset  V.   Daniel,   159,   161,   190,   102, 

206,  209,  3;!9.  341,  402. 
Hloch  V.  Price,  261. 
Block  V.  Railroad  Co.,  65. 
Blodgett  V.  Sleeper,  389. 

V.  Weed,  212,   225. 
Bloodgood  V,  Bruen,  261. 
Bloxam  v.  Railway  Co.,  187. 
Bloxham  v.  Pell,  30,  34,  36,  37. 
Bluck  V.  Capstick,   19, 
Blue  V.  Leathers,  64,  6<j. 
Blumenthal  v.  Whitaker,  444. 
Blumer,  In  re,  288. 
Blyth  V.  Fladgate,  ^44, 
Blythe,  Ex  parte,  282. 
Boardman  v.  Adams,  217,  235. 
▼.  Close,   194. 


Boardman  v.  Grore,  215. 

liuard  of  Trade  of  City  of  Seattle  t. 

Hayden,  15. 
Boast  V.  Firth,  204. 
Boddam  v.  Ryley,  179. 
Bodey  v.  Cooper,  222,  499,  SOL 
Bodwell  V.  Eastman,  500. 
Boggess  V.  LUly,  25. 
Bogue's  Appeal,  147. 
Bohler  v.  Tappan,  410. 
Bohrer  v.  Drake,  395,  404. 
Bollenbacher  v.  Bank,  4(t9. 
Bolton  V.  Puller,  130. 
Bond  V.  Gib.son,  231,  232. 
V.  Hays,  30<J,  322. 
V.  Pittard,  41,  63,  202,  880, 
Bone  V.  Pollard,  5. 
Bonwit   V.   Heyraan,  281, 
Booher  v.  Perrill,  122. 
Boor  V.  Lowrey,  220. 
Boosalis  V,  Stevenson,  31, 
Booth  V.  Bank,  303. 
V.  Hodgson,  26. 
V.  I'arks.  414. 
Bosauquet  v.  Wray,  205. 
Boston  &  C.   Smelting  Co.  ▼.  Smith, 

33,  45,  50,  57,  61. 
Bostwick  V.  Champion,  65. 
Botsford  V.  Klein  ha  us,  269. 
Bottomley  v.  Nuttjill.  239.  37(5. 
Bouch  V.  Sproule,   118, 
Boughner  v.  Black's  Admr.   19    175, 

323. 
Bovill  V.  Hammond,  303.  305. 
Bowas  V.  Tow  Line,  247. 
Bowden  v.  Howell.  3(KJ. 
Bowen  v.  Argall.  42:3.  4Xi,  480, 
V.  Clark,  218. 
V.  Mill  Co.,  38S. 
V.  Richardson,  28. 
Bower  V.  Swadlln,  24t!,  268. 
Bowie  V.  Maddox,  82. 
Bowker  v.  Bradford,  15. 
V.  Gleason,  121. 
V.  Henry,  354. 
V.  Smith,  293. 
Bowling's    Heirs    v.    Dobyn's   Adm'r 

169. 
Bowman  v.  Bailey,  63. 
V.  Bank.  227. 
V.  Blodgett,  410. 
Bowyer  v.  Anderson.  45. 


CASES    CITED. 


609 


[The  figures  refer  to  pages.] 


Bowzer  V.  Stoughton,  3U0. 
Boyce  V.  Burchard,  350. 
Boyd  V.  McCanu,  83. 

V.  Mynatt,  190. 

V.  Plumb,  226. 
Braches  v.  Anderson,  231. 
Bracken  v.  Dillon,  101,  380. 

V.  Kennedy,    302,    303,    305,    321. 
325,  332.  333. 

V.  Slarcli,  232. 
Bradbury  v.  Barnes,  16L 

V.  Dickens,  347,  41Z 

V.  Smith.  401. 
Bradley,  In  re,  297. 

V.  Brigham.  HA),  17a 

V.  Camp,  201. 

V.  Chamberlin,  195. 
Bradley  Fertilizer  Co.  v.  Cooke,  23<>. 
Bradshaw,  Ex  parte,  288. 
Brady  v.  Kreuper,  300. 
Braley  v.  Goddard,  01. 
Branch  r.  Wiseman.  143. 
Brande  t.  Bond,  143. 
Brandon  v.  Nesbltt,  11,  28. 
Braun's  Appeal.  186. 
Bray  v.  Fromont.  80. 
Bray  ley  v.  Goff,  224, 

V.  Hedges.  225. 
Brennan  v.  Pardridge.  109. 
Breslin  v.  Brown,  17.  28. 
Brettel  v.  Williams,  216. 
Brewster  v.  Mott,  389. 
Brickett  v.  Downs,  182,  27a 
Bridges  v.  Iron  Co.,  44. 
Briggs  V.  Briggs,  409. 

V.  Vanderbilt,  00. 
Brigham  v.  Eveleth,  306. 
Bright  V.  Hutton,  71. 
Brink  v.  Insurance  Co.,  60,  250. 
Brinley  v.  Kupfer,  300. 
Brlnsmead  v.  Harrison,  2TZ. 
Brisban  v.  Boyd,  202. 
Bristoe  v.  Whltmore,  184. 
Britain  v.  Rosslter,  21. 
British  Wagon  Co.  v.  Lea,  383. 
Broadway  Nat.  Bank  v.  Wood,  276. 
Brock  V.  Bateman,  2S8,  289. 
Bromley  v.  Elliot,  44. 

V.  W^llliams,  338. 
Brooke  v.  Alexander,  487. 

V.  Enderby,  207. 

T.  Evans,  240,  251. 


Bruoke  v.  Washington,  22,  125^ 
Brooks  V.  Maitin,  20.  330. 

V.  Sullivan,  217. 
Broome,  Ex  parte,  82,  359. 
Hrophy  v.  Holmes,  18. 
Brown  v.  Agnew,  172,  300^ 

V.  Bamberger,  410. 

V.  Boorman,  248^ 

V.  Bostian,  224. 

V.  Byers,  225. 

T.  Chancellor,  15,  401. 

V.   Davis,  443,  459. 

V.  De  Tastet,  107,  414. 

V.   Fitch.  24<>. 

V.  Gordon,  261,  271. 

V.  Insurance  Co.,  12. 

V.  Jaquette,  45,  50,  60,  66. 

V.  Jewett,  106. 

V.  Leonard,  87,  95,  201. 

V.   McFarland's  Ex'r,  411. 

V.  Oakshot,  123. 

V.  Pickard,  81.  107. 

V.  Tapscott,  63,  303,  316.  820. 

V.  Watson,  410. 

V.  Wooton.  272. 
Browne  v.  Canal  Co.,  185. 

V.  Collins,  187. 

V.  Gibbin.'!,  175. 
Browning  v.  Browning,  190. 
Brown's   Appeal,   108.   169. 
Brown's  Ex'r  v.  Higginbotham,  i 
Brozee  v.  Poyntz,  239. 
Bruen  v.  Marquand,  219,  222. 
Brundred  v.  Muzzy,  44. 
Bryant  v.  Lord.  409. 

V.  Warden.  313. 
Brydges  v.  Braulill,  248. 
Buchan  v.  Sumner,  125. 
Buclianan  v.  Curry,  217,  404. 

V.  Tilden.  255. 
Buchoz  V.  Grandjean,  217. 
Buck  V.  Alley,  447. 

V.  Hopkins,  447. 

V.  Smith,  76. 

V.  Winn,  125.  142. 
Buckhause,  In  re,  283. 
Buckingham  v.  Hanna,  154. 

V.  Ludlum,  168,  109. 
Buckland  v.  Johnson,  272. 
Buckley  v.  Barber,  135,  384 

V.  Lord,  442,  489. 
Bucknam  v.  Barnum,  67. 


510 


CASES    CITED. 


[The  figures  refer  lo  pages.] 


Buckner  v.  Ries,  307. 
Buettner  v.  Steinbrecher,  229. 
Buffalo   City   Bank   v.    Howard,   261, 

2G2. 
Buffum  V.  BuEfum,  126. 
Buford  V.  Neely.  403. 
Buf?g's  Case,  399. 
Bulger  V.  Rosa.  130,  280. 
Bulkley  v.  Dayton,  221. 

V.  Marks.  490. 
Bull  V.  Coe.  319. 

V.  Schuberth.  60. 
Bullard  v.  Kinney,  300,  303. 
Bullen  V.  Sharp.  3.  41.  46.  50,  67,  58. 
Bullitt  V.  Chartered  Fund.  483. 
Bullock  V.  Chapm.an.  3oO. 
V.  Crockett.  20. 
V.  Hubbard.  16. 
Bunnel  v.  Taintor's  Adm'r,  22. 
Burckle  v.  Eckart,  61. 
Burdon  v.   Barkus.  21,   121.   172,   173. 

203. 
Burgan  v.  Lyell.  212,  218. 
Burgen  v,  Dwlnal,  247. 
Burgess  v.  Badger,  167. 
V.  Burgess.  108. 
V.   Merrill.   12.   13. 
Burke  v.  Noble.  268. 
V.  Railroad  Corp..  IS. 
V.  Roi)er.  32S.  504. 
Burleigh  v.  Widte.  219. 
Burley  v.  Harris.  300,  302. 
Burls  V.  Smith.  24. 
Burniester  v.  Norris.  229. 
Burn  V.  Burn,  223. 
Burnap  v.  Engine  Co..  72. 
Burnell  v.  Hunt.  143. 
Burnet  v.  Hope.  104. 
Burnett.  Ex  parte.  291. 

V.  Snyder.  47.  75.  79,  80,  335.  899. 
Burney  v.  Boone.  303. 
V.  Grocery  Co.,  401. 
Burns  v.  Mas^on,  106. 

V.  Nottingham,  299,  316,  317. 
V.  nilsbury,  268. 
Burnslde  v.  Merrick,  126. 
Burpee  v.  Bunn.  147. 
Bui-rough's  Appeal.  228. 
Burt  V.  Lathrop,  24. 
Burton  v.  Goodspeed.  43,  61. 

V.  Wookoy.  163,  164. 
Burtus  V.  Tlsdall,  278. 


Burwell  v.  Cawood,  258.  807. 

V.  Springfield.  390. 
Burwltz  V.  Jeffers.  367. 
Bury  V.  Allen,  20.  172.  175,  176,  887. 
Busby's  Adm'x  v.  Chenault,  296. 
Bush  V.  Clark,  274,  2S5,  410. 

V.  Llnthieum.  12.  13. 
Buslinell.  Ex  parte.  227. 
Buskin  v.  Boyce,  358. 
Butchart  v.  Dresser,  238. 
Butler  V.  Merrick.  57. 

V.  Toy  Co..  16. 
Butler  Sav.  Bank  v.  Osborne,  «,  & 
Butterfleld.  Ex  parte.  282. 

V.  Beardsley.  1503. 

V.  Lathrop.  63. 
Buxton  V.  Ll.ster.  76.  77. 
Buzard  v.  Bank,  45. 
Byrne.  In  re,  279. 


Cabell  V.  Vaughan,  86flw 
Cady  V.  Shepherd.  223. 

V.  Kyle.  218. 
Cain   Lumber   Co.   v.   Standard    Dry 

Kiln  Co.,  70. 
Calder  v.  Creditors.  121.  122.  130. 

V.  Rutherford.  384. 
Caldicott  V.  Griffith,  24. 
Caldwell  v.  Leiber,  166. 

V.  Stlleman,  289. 
Calkins  v.  Smith.  323. 
Cameron  v.  Bank,  500,  501. 

V.  Blackman,  221,  231. 

V.  Watson.  117. 
Caniniack  v,  Johnson,  278. 
Camp  V.  Grant.  285.  385. 
Campbell  v.  Campbell,  12.=),  176. 

V.  Dent.  44. 

V.  McGnire.  281. 

V.  Mullett.  8.  125,  130,  164. 
Candler  v.  Candler.  27. 
Capen  v.  Barrows,  18,  321,  824. 
Capper.  Ex  parte.  71. 
Carey  v.  Burruss.  15. 
Carico  t.  Moore.  109. 
Carillon  v.  Thomas.  145. 
Carlthers  v.  Jarrell,  185. 
Carlen  v.  Drury.  328. 
Carlisle  v.  Tenbrook.  116. 


CASES    CITED. 


611 


[The  figures  refei   to  pages.} 


Carlton  v.  Coffin.  261. 

V,  Cummins,  20,  396. 
Carmlchael  v.  Greer,  260. 
Carney  v.  Hotchkiss.  239. 
Carpenter  v.  Greenop,  300. 
Carr  v.  Hertz,  237. 

V.  Leavitt,  22. 
Carrere  v.  Spofford,  410. 
Carrie  v.  Commercial  Co.,  184. 
Carrier  v.  Cameron.  225,  228. 
Carrutbers  v.  Sheddon,  103, 
Carter,  Ex  parte,  294,  296. 

In  re,  297. 

V.  Bailey,  64. 

T.  on  Co.,  500. 

V.  Peck,  65. 

V.  Roland.  74.  148,  403.  404. 

V,  Whaley,  84.  2(>o. 

V.  Whalley,  8."),  96.  265. 
Carver  v.  Dows,  232. 
Case  V.  Abeel,  410. 

V.  Beauregard.  129,  131,  277,  279. 
Casey  v.  Brush,  299. 

V.  Carver.  213. 
Cassels  v.  Stewart,  161,  208. 
Cassidy  v.  Hall,  44.  47,  48,  50,  60,  83. 
Castill,  Ex  parte,  291. 
Caswell  V.  Cooper,  323. 
Catskill  Bank  v.  Gray,  16. 
Cattle  V.  Leitch.  405. 
Cavander  v.  Bulteel,  156,  182. 
Central  City  Sav.  Bank  v.  Walker,  72. 
Central  Ohio  Salt  Go.  v.  Guthrie.  26. 
Cesena  Sulphur  Co.  v.  Nicholson,  185. 
Chadsey  v.  Harrison.  299.  300. 
Chaffe  V.  Ludeling,  73. 
Chaffee  v.  Jone.s,  101. 
Chaffraix  v.  Lalitte,  44,  58. 

v.  Price.  56. 
Chamberlain  v.  Dow,  264. 

V.  Sawyers.  166,  416. 
Chambers  v.  Sloan,  102. 
Champion  v.  Bostwick,  63,  122. 

V.  Dorsett,  161. 

V.  Higgins,  271. 

V.  Parkes,  12. 

V.  Sherman.  178. 
Ohannon  v.  Stewart.  335,  336. 
Chapin  v.  Clemitson,  124. 
Chapline  v.  Conant,  45,  56. 
Chapman  v.  Beach,  355,  359,  361. 


Chapman  v.  Eames,  6,  63. 

V.  Hughes,  31,  32,  120. 

V.  Koops,  144. 

V.  Lipscomb,  45. 
Chappie  V.  Cadell,  191,  34a 

V.  Davis.  232. 
Charlton  v.  Poulter,  178,  347,  848. 

V.  Sloan,  160. 
Chase  v.  Barrett,  122. 

V.  Deuiing.  375. 

V.  Garvin.  300. 
Chavasse,  Ex  parte,  28. 
Ohavener  v.  Wood,  126. 
Cheap  V.  Cramond,  30,  35. 
Cheesman  v.  Price.  405. 
Chemung  Canal  Bank  v.  Bradner,  228 
Chenowith  v.  Chamberlln,  227. 
Cherry  v.  Strong.  67. 
Cheshire.  The.  28. 
Chester  v.  Dickerson,  21,  22,  25,  59 

233. 
Chick  v.  Trevett,  503. 
Child  V.  Morley.  174. 
Childs,  In  re.  274. 

V.  Dobbins,  12. 

V.  Hyde.  384,  885. 

V.  Pellett.  120,  122,  281. 
Chlnlc  V.  Gervals,  112. 
Chippendale.  Ex  parte.  172,   174,  216. 

241. 
Chi.<;holm   v.  Cowles.  6. 
Chittenden  v.  Witbeck,  163. 
Choteau  v.  Raitt,  363. 
Christ  V.  Firestone,  233. 
Christie,  Ex  parte,  272. 
Christy's  Appeal,  325. 
Chuck,  Ex  parte,  36. 
Church  V.  Bank,  389,  391. 

V.  Knox,  142.  148,  151. 

V.  Sparrow,  228. 
Churton  v.  Douuias.  349. 
Cilley  V.  Van  Patten,  320. 
Cincinnati,  H.  &  D.  R.  Co.  T.  Spratt, 

65. 
Citizens'  Nat.  Bank  v.  Hlne,  .59. 
City  Bank  of  Brooklyn  v.  McChesney. 

262. 
Clafflin  Co.  v.  Evans,  218. 
Claflin  V.  Ambrose,  218. 

v.  Ostrom,  239. 
Clagett  V.  Kilbourne,  128, 142,  148,  156. 
332. 


512 


CASES    CITED. 


[The  fibres  refer  to  pages.) 


Clapp  V.  Lacey,  423,  486. 

V.  Rogers,  2G2. 
Clark  V.  Allen,  233. 

V.  Gushing,  143. 

V.  Dibble,  316,  322. 

V.  Grldley,  58,  3:{2,  333,  336,  838. 

V.  Houghton.  107. 

V.  Johnson,  232. 

V.  Leach,  19G,  197. 

V.  Smith,  Gl. 

V.  Wilson,  409. 

V.  Worden,  170. 
Clarke,  Ex  parte,  288. 

V.  Hart,  331,  402. 

T.  McAuliffe,  22. 

V.  Mills,  307. 
Clark's  Appeal,  115,  119. 
Clarkson,  Ex  parte,  130. 
Claskens  Co.  v.  Silber,  252. 
Clay,  Ex  parte,  288. 

T.  Carter.  231. 

V.  Field,  410. 

V.  Freeman,  135,  180.  4ia 
e'layton's  Case,  2GG-2G8. 
Clegg  V.  Edmundson,  331. 

V.  Fishwlck,  IGl. 
Clement  v.  Association,  22(X 

V.  Assurance  Co.,  240. 

V.  Brush,  222. 

V.  Clement,  261. 

V.  Foster,  335. 
Clements  v.  Bowes,  342. 

V.  Norris,  159,  163,  198. 
Cleveland  v.  Woodward.  o75. 
Cleveland  Paper  Co.  v.  Courier  C3o.,  16. 
Clifford  V.  Brooke,  337. 
Clift  V.  Barrow,  202,  337. 
Clifton  V.  Howard,  56-5a 
Clough,  In  re,  230. 
Clowes,  Ex  parte.  253,  275. 
Coates  V.  Coates,  205,  344. 
Cochran  v.   Cunningham's   Blx'r,  387, 
888. 

V.  Perry,  398. 
Cochrane  v.  Allen,  316. 
Cock  V.  Bailey,  444. 

V.  Evans,  118. 
Oockerell  v.  Aucompte,  2^ 
Cockle  v.  Whiting,  134. 
Oocks  T.  Nash,  2(j8. 


Coddington  v.  Hunt,  263. 

V.  Idell.  170,  172. 
Coe  V.  Shoe  Co.,  274. 
CofBn  V.  Jenkins,  61,  65. 
Coffin's  Appeal,  442,  462,  46a 
Cofton  V.  Horner,  327,  349l 
Coggswell  V.  Davis,  264. 
Colbeck,  In  re,  36. 
Coldren  v.  Clark,  170. 
Cole  V.  Moxley,  395. 

V.  Reynolds,  309,  313. 
Coleman  v.  Coleman,  73. 

V.  Eyre,  17,  21. 

V.  Marble,  329. 
Colgrove  v.  Tallman.  265. 
Collamer  v.  Foster.  322. 
Collett  v.  Smith.  220. 
Colley  V.  Smith,  303. 
Colliuge,  Ex  parte,  294. 
Collingwood  v.  Berkeley,  82. 
Collins  V.  Hood,  279. 

V.  Jackson.  203. 

V.  Young.  357. 
Collins'  Appeal,  134. 
Collumb  V.  Rend,  128. 
Collyer  v.  Moulton,  270. 
Colquhoun  v.  Brooks,  185. 
Colt  V.  Lasnler.  249. 
Columbia  Land  &  Cattle  Co.  t.  Daly. 

473. 
Columbia  Nat.  Bank  v.  Rice,  219,  233. 
Colwell  V.  Britton,  44. 
Commercial  Bank  v.  Mitchell,  147. 
Com.  V.  Bennett.  44. 

V.  Bracken,  411. 
Compton  V.  Thorn,  172. 
Comstock  V.  Buchanan,  16(X 
Conely  v.  Wood,  215. 
Conklin  v.   Barton,  61. 
Connolly  v.  Davidson,  55,  56. 
Connor  v.  Allen,  410. 
Conroy  v.  Campbell.  116. 
Const   V.    Harris.    159,    161,    189,    191, 

193,  194,  350,  353,  360. 
Continental  Nat.  Bank  v.  Strauss,  120, 

429,  474,  488,  496. 
Converse  v.  Transportation  Co.,  66. 
Conwell  V.  McCowan,  271. 

V.  Sandldge's  Adm'r,  141, 
Cook,  Ex  parte,  285. 

In  re,  279. 


OASES    CITED. 


613 


[The  figures  refer  to  pages.l 


Oook  V.  Canny,  320. 

V.  Carpenter,  70. 

V.  Collingridge,  415. 

V.  Rogers,  25S. 
Cooke  V.  Batchelor,  371. 

V.  BenbOTv,  lb*'J,  UOO. 
Coope  V.  Eyre,  63. 
Cooper  V.  Hood,  345. 

V.  Webb,  342. 
CoplaJid  V.  Toulmin,  138. 
Corbett,  In  re,  2S1. 

V.  Cannon,  213. 
Corbin  v.  Boies,  4S3. 
Corbrldge,  Ex  parte,  282. 
Cornells  v.  Stanhope.  391. 
Comhauser  v.  Roberts,  85. 
Corry  v.  Railway  Co.,  185. 
Costello  V.  Mxdorff.  262. 
Costley  V.  Towles,  334. 
Cotton  V.  Evans,  227. 
Cotzhausen  v.  Judd.  213,  215.  3110.  391. 
Coundrey  v.  Gilliam,  137. 
Course  v.  Prince,  303. 
Coursen  v.  Hamlin,  ICT. 
Coursin's  Appeal,  6. 
Courson  v.  Parker.  303. 
Coventry  v.  Barclay,  193. 
CovlUe  V.  Gllman,  338,  343. 
Cowan  V.  Gill.  288. 
Coward  v.  Clantou,  21. 
Cowden  v.  Cairns,  142. 
Cowell  V.  Watts,  22,  329. 
Cox  V.  Delano,  52. 

V.  Hickman,  37-39.  42.  43.  46,  47. 
49.  .^)0.  .52.  .54,  57.  63.  80,  'Mi. 
375,  419. 

V.  Miller.  15. 

V.  Peters,  354,  356. 

V.  Piatt,  279. 

V.  Russell,  14«. 

V.  Volkert.  334,  351,  356. 

V.  Willougliby,  195. 
Craft  V.  MeConoughy,  26,  29. 
Cragg  V.  Ford.  176. 
Cragln  v.  Gardner,  386. 
Craig  V.  Alverson,  83. 

V.  Hulschizer,  389,  391. 
Crane  v.  French.  147.  148,  151,  217. 

V.  Morrison.  131,  152. 
CraiT  V.  Williams.  107. 
Crater  v.  Binlnger,  503. 
GEO.PART.— 33 


Crawford  v.  Baum,  147. 

V.  CoUlns,  109. 
Crawshay    v.    Collins,    1H7.    177,    189. 
402. 

V.  Maule,  77,  153,  155,  359. 
Crellin  v.  Brook,  236. 
Crispe  v.  Perritt,  291. 
Crittenden  v.  Hill.  217. 
Crocker  v.  Colwell,  107. 
Crockett  v.  Crain.  287. 
Croft  V.  Day,  110. 
Crofts,  Ex  parte,  290. 
Cronkhlte  v.  Herrin,  261. 
Cronly  v.  Bank,  202. 
Crooker  v.  Crooker.  152.  288. 
Cropper  v.  Coburn,  143.  152,  344. 
Crosby  v.  Jeroloman,  24G. 

V.  McDermitt,  324. 

V.  Timolat.  299,  309-31L 
Cross  V.  Bank.  100. 

V.  Cheshire.  323. 

V.  WilUams.  24. 
Crossfleld  v.  Such,  5. 
CrosthwaJt  v.  Ross.  226,  229. 
Crunch  v.  Bank,  441. 

V.  Bowman,  107. 
Crow  V.  Drace,  125,  142. 

V.  Green,  308. 
Croxton's  Case,  175. 
Crozier  v.  Kirker,  107. 
Cruikshank  v.  M'Vicar,  33a 
Culley  V.  Edwards.  43. 
Cummings  v.  Morris.  304. 
Cumming's  Appeal.  292. 
Cummins  v.  Cassily,  223. 
Cunningham   v.   Munroe,  388. 
Currier  v.  Webster,  319. 
Curry  v.  Fowler,  44. 
Curtis  V.  Hollingshead,  101,  378. 

V.  Woodward,  2.S8. 
Gushing  v.  Marston,  363. 

V.  Smith.  239. 
Cutler  V.  Winsor.  63.  64. 


Dake  v.  Butler,  44,  50. 
Dakln  v.  Graves,  172. 
Dale  v.  Hamilton,  17,  22,  78,  162. 
V.  Fierce,  45.  61. 


rii4 


CASES    CITED. 


[The  figures  refer  to  pag»>8.] 


Dalton    City    Co.    v.    DaltoD   Maiiuf'g 

Co..  43. 
Dana  v.  Gill.  3<>8,  321. 

V.  Stearns,   13. 
Dance  v.  Girdlm-.  103. 
Daniel  v.  Daniel,  391. 

V.  Owen.*;,   143,  145. 
Daniels  v.  McCormick,  17a 
Darby  v.  Darby,  127. 

V.  Gllligan.  l.W,  280. 
Darland  v.  Kosi-ncrans,  ISL 
Darrow  v.  BrulT,  483. 

V.  Calkins,  128. 

V.  Troduce  Co.,  36H. 
Dart  V.  Bank,  27*J. 

V.  Lalmbeer,  3iy. 
Davenport  v.  (Jear,  30<J,  317. 
D.-ivies  V.  Atkinson,  182. 

V.  Hawkins,  191. 

V.   lluiiiptirey,  275. 
1  >.ivi8.  Ex  parte,  (JO. 

V.  Allen,  2«Jo. 

V.  Anier,  34.'.,  349,  301, 

V.  Aiialile,  272. 

V.   Bowes,   474. 

V.   Cook.   231. 

V.  Darling,  197. 

V.   Davis.  (>0.  121,  327.  838,  339. 

V.  Dotlson,  2:^1. 

V.  Kvans,  (VS,  70.  'OO. 

V.  (Jeliiaus,  2<>. 

V.  (Jrovo,  335.  3541. 

V.  .Johnston,  3.'i2. 

v.   Lajie,   14. 

V.    .Merrill.  -JiKJ,  3(X1. 

V.   Kutr,  371. 

V.   Sniltli,  391. 

V.   Willis,    2UO. 
Davison  V.  Donaldson.  271. 

V    G lilies,   186. 

V.  Robertson,  225. 
Dawson  v.   Parsons,  liSt 
Day  V.  Lockwood,  171. 

V.  Stevens.  45,  (i4,  Ott. 

V.  Wetherby,  2G9. 
Dayton  v.  Wilkes,  412,  41i 
Deal  V.  Bogue,  143. 
Dean  v.  Dean,  113,  118. 

V.  Macdowell,  205. 

V.  Newhall,  24G,  268. 

V.  Phillips.  249. 


Deardofs  Adm'r  v.  Thacher,  225. 

De  Berenger  v.  Ilaaiel,  405. 

De  Berkom  v.  Smith,  31.  82. 

Deckard  v.  Case.  233. 

Decker  v.  Howell.  92. 

Decks  V.  Stanhope,  342, 

Deerlng  v.  Flanders,  260. 

De  .Tarnette's  E.\'r  v.  .McQueen,  316 

Delauney  v.  Strickland.  24. 

Del  basse,  Ex  parte,  54,  57,  58. 

De  LIzardI  v.  Gossett,  443. 

Dell,  In  re.  296. 

De  Mautort  v.  Saunders,  876. 

De  Mazar  v.  Pybus,  104. 

Denlthorne  v.  Hook,  83. 

Deninan  v.  Dosson,  260. 

Densmore  Oil  Co.  v.  Densmore,  161. 

Dent  V.  Tramway's  Co.,  186. 

Denton  v.  Rodle.  239. 

Denver   v.    Roane,    166,    167,   332-334 

843.  411. 
Derlng  v.  Earl  of  Winchelsea,  173. 
Desha  v.  Holland,  364. 

V.  Smith,  171. 
Detnstel,  Ex  parte,  291. 
De  Tastet  v.  Bordenave,  347. 

v.  Bordlcu.  359. 

V.  Shaw,  100. 
Detroit  v.  Robin.son,  219. 
Devall  V.  Burbrido,  178. 
Dewit  V.  Stanin.rd,  300. 
Dexter  v.  ArnoM,  170.  171. 
De  Zeng  v.  Bailey,  2r>8. 
Dickinson  v.  Dickinson,  258,  260.  261. 

v.  Valpy,  <58,  84.  215.  225.  2;i6,  375 
Dickson  V.  Alexander,  219,  231. 

V.  Dryden.  22f>. 
DIgby,  Ex  parte.  36. 
Dillard  v.  S(•rup^'s,  66. 
DImon  v.  Hazard,  131,  277. 
Dlmond  v.  Henderson,  178. 
D'lnvllUers'  Estate.  288. 
Dixon  v.  Hamond,  384. 
Doak  V.  Swann.  60. 
Dob  V.  Halsey,  142.  149,  246.  391. 
Dobbin  V.  Foster,  382. 
Dodd  V.  Dreyfus.  381. 

V.  Tarr.  304. 
Doddington  v.  Hallet.  180. 
Doe  V.  Hulme,  218. 

T.  Summersett,  218. 


CASES    CITED. 


.515 


[The  figures  n'liT  :o  pages.] 


Doggett  ▼.  Dill,  385. 

V.  Jordan,  33. 
Dolmau  v.  Orchard,  261. 
Donaldson  v.  Bank.  134,  335. 

V.  Williams,  1.59. 
Doner  v.  Srauffer,  275. 
Donley  v.  Hall,  44. 
Donnally  v.  IJynu,  229,  240. 
Donnell  v.  Harslie.  56,  G4,  66.  186. 

V.  Jones,  371. 
Doty  V.  Bates,  225. 
Dougiierty  v.  Van  Nostrand,  412. 
Douglas  V.  Patrick,  219,  220. 

V.  Winslow.  137. 
Douglass  V.  Alder.  2S0. 
Douthlt  V.  Doutliit.  316. 
Dow  V.  Moore.  1S9,  193. 

V.  Phillip.^.  224. 
Dowling  V.  Clarke.  307. 
Downing,  In  re.  2SS. 
Downs  V.  Collins,  207.  345. 

V.  Jackson,  172. 
Doyle  V.  Bailey,  09. 
Drake  v.  Reekliani.  240. 

V.  Elwyn.  33,  100.  107,  233. 

V.  Mitchell.  272. 
Draper  v.  Holliugs.  141. 
Dressel  v.  Lonsdale,  15. 
Drew  V.  Beard.  328.  355. 

V.  Ferson,  100.  3o:{. 
Dreyer  v.  Sander.  107. 
Driver  v.  Burton,  3<;o. 
Drucker  v.  Welllions.-.  102. 
Drury  v.  Roberts.  .3.">7. 
Dry  V.  Boswoll.  59,  «'»3. 

V.  Davy.  103. 
Dubos  V.  Jones,  50. 
Dudgeon  v.  O'Connell.  219.  222. 
Dudley  v.  Little.  28. 

V.  LittlefieM.  106. 

v.  Love.  243. 
DuCf  V.  .Mn-ulre.  30.3.  313. 
Duffield  V.  Bralnerd.  190. 
Duffy  V.  Gray.  371. 
Dulany  y.  Elford.  34. 
Duniont  v.  Ruepprecht.  118L 
Duncan  v.  Lewis.  240. 

V.  Lowndes.  218,  225. 

V.  Luutley.  337. 

V.  Lyon,  320. 
Dundass  v.  Gallagher,  2.26,  261. 


Dunham  v.  GlUis,  319.  821- 

V.  Loverock.  5. 

V.  Murdock,  147. 

V.  Presby,  28,  29. 
Duukerson.  In  re,  285. 
Dunlap  V.  Byers,  274. 

V.  Green,  126. 

V.  Limes,  410. 

V.  Watson,  166,  167. 
Dunman  v.  Coleman.  384. 
Dunne  v.  Euglisli.  ICA. 
Dunnell  v.  Henderson,  114. 
Duunica  v.  Clinkscalos.  239. 
r>uuning's  Appeal,  485. 
Duntou  V.  Brown.  11,  12. 
Du  Pont  V.  McLaran.  399. 
Dupuy  V.  Sheak,  14. 
Durant  v.  Abendrath,  422. 

V.    Abendrnh.   443,    444,   459,   485, 
486. 

V.  Rheuer.  29. 
Durborrow's  i  ppoal,  134. 
Duress  v.  Horneffer.  15. 
Dui^'in  V.  Soniers.  218. 
Duryea  v.  Burt,  75,  155.  503. 

V.  Whitconib.  31,'  57,  58. 
Dutton  V.  Morrison.  144-146,  14S,  2Ss. 

3:55. 
Dwinel  v.  Stone.  32.  56.  58.  60,  61.  122 
Dwyer  v.  Sutlierland.  224.  388. 
Dyer  v.  Clark,  125.  12S.  147,  180,  181. 

V.  Sutherland,  388. 


Magle  V.  Bucher,  306. 

lOaster  v.  Bank,  41U. 

Eastman  v.  Clark.  44,  47,  49,  64. 

V.  Cooper,  214. 
ICnstwood  V.  Bain,  376. 
Eitbert's  Appeal.  22. 
Eckert  v.  Clark.  166. 
p:ckliar(lt  V.  Wilson,  386. 
Eddie  v.  Davidson.   145,  146. 
Eddowes  v.  Hopkins,  171. 
Edens  v.  Williams.  322.  403. 
Edserly  v.  Gardner,  24. 
Ed.ue worth  v.   Wood.  rjifZ. 
Edmiuston  v.  Wright,   174, 
Edmonds.  Ex  pariie,  282. 

V.  Robinson,  Itk 


516 


CASES    CITED. 


[The  flgrures  refer  to  pagest] 


Edmundson  v.  Thompson,  85,  250. 
Edwards  v.  Remington,  320. 

V.  Tracy,  45,  40,  58,  212. 
£ggleston  V.  Boardman,  3t>7. 
Eichbaum  v.  Irons,  24. 
Eighth    Nat.    Bank   of   New    Yorli    t. 

Fitch,  143,  147. 
Elder  v.  Hood,  315. 
Elder's  Appeal.  304. 
Eliot  V.  Himrod.  460. 
Elliot  V.   Brown,  347. 

V.  Stevens,  279. 
Ellis  V.  Bronson,  2<;o.  264,  265. 

V.  Commander,  349. 

V.  Schmoeck,  82. 

V.  Ward,  70. 
ElIlsoD  V,  Cliapman.  320. 
Ells  V.  Bone,  272. 
Ellsworth  V.  I'omeroy,  44. 

V.  Tartt,  6(5. 
Elton,  Ex  parte.  291. 
Emerson  v.  Baylies,  224. 

V.  Durand,  KW,  170. 
Emery  v.  Bank.  297. 

V.  Parrott,  324. 
Emly  V.  Lye.  232.  239. 
England  v.   Curling,  7(1,  77,   189.   llKt. 

194,  198,  347. 
Englls  V.  Furnlss,  313. 
Enix  V.  Hays.  3r»5. 
Eunis  V,  Williams,  2<K). 
Ensign  v.  Wands,  7,  215. 
Enterprise  Oil  vV:  Cas  Co.  v.  National 

Transit  Co..  2;i0. 
Epplng  V.  Aiken.  325. 
Equitable  Life  Assur.  Soc.  ▼.  Coaus, 

103. 
Erb  V.  West.  132,  281. 
Erlchsen  v.  Last,  185. 
Ernest  v.  NichoUs,  39. 
Eshleman  v.  Uarnish,  46. 
ri]spy  V.  Comer,  201. 
Essell  V.  Hay  ward.  406. 
Essex  V.  Essex,  21,  195.  345. 
Estabrook  v.  Messersmith,  Ji90l 
Estes,  In  re,  285. 

V.  Whipple,  300,  303. 
Estwlck  V.  Couingsby,  359. 
Evans  v.  Bryan,  183. 

V.  Carey.  246. 

V.  Coventry.  354.  359. 

▼.  Drummond,  270. 


Evans  v.  Evans,  359. 

V.  Hanson,  114. 

V.  Hawley,  181. 

V.  Philadelphia  Club,  4<tt. 

V.  Richardson,  11,  28. 

V.  SmaJlcombe,  328. 

V.   Winston,  279. 
Everet  v.  Williams,  26.  29. 
Everhart's  Appeal,  22. 
Event  V.  Watts,  83. 
Everitt  v.  Chapman,  7,  33.  63. 
Everly  v.  Durborrow,  117. 
Everth  v.  Blackburne,  2<). 
Ewingf  V.  Osbaldiston.  29,  Ifc^L 


Falrbank  v.  Leary,  29. 

V.  Newton,  26. 
Falrburn  v.  Clover.  '.','A. 

V.  Pearson,  354,  361. 
Falrchlld  v.  Fairciiild.  22,  125,  128. 

V.  Valentine.  339. 
Fairfield  v.  Phillips,  124. 
Fairtliorne   v.    Weston,  327,  340.  356. 

406. 
Faith  V.  Riclimond.  239. 
Faldo  V.  Grlffln.  2(51. 
Falkland  v.  Cheney,  205. 
Fanning  v.  Chadwick.  306,  315. 
Fanshawe  v.  Lane,  491. 
Fargo  v.  McVlcker,  503. 
Farley  v.  Clevehuid.  380. 

v.  Ivovell.  3.89. 

V.  Moog,  335. 
Farmer  v.  Samuel,  118. 
Farmers'  Bank  v.  Smith.  73. 
Farmers'  Ins.  Co.  v.  Ross,  7. 
Farnsworth  v.  Boardman,  474. 
Faruum,  In  re,  297. 
Farr  v.   Johnson,   139. 

V.  Pearce.  19. 

V.  Wheeler,  10. 
Farrar  v.  Beswick.  138. 
Farrell  v.  Freldlander.  244. 
Farwell  v.  Trust  Co.,  182. 

V.  Tyler,  308. 
Faulds  V.  Yates,  159. 
Faulkner  v.  Hyman,  101. 
Fawcett  v.  Osborn,  56. 

V.  Whitehouse,  161,  177,  339 


CASES    CITED. 


617 


rrhe  figures  refer  to  pnges.1 


Fay  T.  Burdltt,  14. 

V.  Davidson.  56,  5«,  5W4. 

V.  Duggan,  143. 

V.  Noble.  72. 
P'ayette   >at.    Bank   of   Lexington   v. 

Kenney's  Assignee,  285. 
Featherstone  v.  ilunt,  271. 
Featberstonhaugli    v.    Fenwlck.    162, 
11)7,  lyy,  3'.H>,  402. 

V.  Turner,  20,  107,  345,  414. 
Felgley  v.  Sponeberger,  236. 
Fellows  V.  Greenleaf,   156. 
Fulton  V.  Deall,  45. 
Fennings  v.  Grenville,  li>L 
Fenton  v.  Block,  3'Jl. 

V.  Folger,  147. 
Fereday  v.  Wlglitwlck,  284. 
Ferguson  v.  Baker,  320. 

V.  Fyffe,  21 S. 

V.  Wright,  2yy. 
Fern  v.  Cusiiing,  284. 
P'erns  v.  Carr,  H>. 
Ferris  v.  Thaw,  25,  112. 
Ferson  v.  Monroe.  2TU.  287. 
Fossler  v.  Hickernell,  303. 
Fichthorn  v.  Buyer.  223. 
Fickett  V.  Swift,  220. 
Field  V.  Cooks.  73. 

Fifth  Ave.  Bank  v.  Colgate,  443,  45;i. 
FUley  V.  Fhelps,  137,  147. 
Finch  V.  Ue  Forest,  106. 
Finckle  v.  Stacy.  331. 
FIndlay,  Ex  parte,  284. 
Finnegan  v.  Noerenberg,  72. 
Firemen's  Ins.  Co.  v.  Floss,  376. 
First  Ave.  Nat.  Bank  v.  Colgate.  453. 
First   Commercial   Bank    v.    Talbert, 

200. 
First  Nat.  Bank  v.  Almy,  72. 

v.  Carpenter,  220. 

V.  Cody,  70. 

V.  Freeman,  'S25,  233. 

V.  Morgan.  220,  239. 

V.   Rowley,  231. 
First   Nat.    Bank   of   Canandalgna  t. 

Whitney,  471,  472,  474. 
First    Nat.    Bank    of    Green    Bay    v. 

Gofif,  501. 
First   Nat.    Bank    of   Jersey    City    v. 

Huber,  444,  497. 
First    Nat.     Bank    of    Portland,     Ex 
parte,  106. 


First  Nat.  Bank  of  Wausau  r.  Con 

way,  31. 
Fish  V.  Farwell.  373. 

V.  Gates,  240.  3«)3. 

V.  Thompson,  183. 
Fisher  v.  Marsh,  309,  377. 

V.  Sweet.  300. 

V.  Syfers,  279. 

V.  Taylor.  221,  229. 
Fiske  V.  Gould.  335. 
Fitch  V.  Harrington,  79,  Sa 
Fitzgerald  v.  Christl,  132. 

V.  Grlmmell,  101. 
Fitzpatriek    v.    Flannagan.    129,    131, 

335. 
Flack  V.  Oharron.  279. 
Flagg  V.  Stowe.  73.  122,  140. 
Fleming  V.  Railway  Co.,  248. 
Flemylng  v.  Hector,  24. 
Fletcher  v.  Hawkins.  186. 

V.  Ingram,  212. 

V.  -Pullen.  83,  85,  87. 

V.  Reed,  396. 

V.  Vandusen,  346. 
Flint  v.  Marble  Co.,  60. 
Flitcroft's  Case,  187. 
Flockton  V.  Bunning,  415. 
Flower  v.  BamekoCf,  21,  25,  57. 
Fogg  V.  La  wry,  143,  145. 
Folds  V.  Allardt.  12. 
Foot  V.  Sabin,  227. 
Ford  V.  Smith,  Go,  145. 

V.  Whitmarch.  85. 
Forman  v.  Homfray,  338,  340. 
F'orney  v.  Adams,  390,  391. 
Forster  v.  Hale.  21. 

V.  Lawson,  371. 

V.  Mackreth,  22G. 
Forsyth  v.  Woods,  28,  106,  277. 
Foss  V.  Harbottle,  328. 
Foster  v.  Allanson.  310,  320. 

V.  Flfield,  391. 

V.  Hall,  403. 
Foster's  -Appeal,  128. 
Fourth    Nat.   Bank   of   New   York    v. 
New  Orleans  &  C.   R.  Co..  74,  137, 
398,  400. 
Fourth  St.  Nat.  Bank  v,  Haines,  454. 

V.  Whltaker,  454. 
Fowler  v.  Reynal,  104. 
Fox  V.  Clifton,  33,  154. 

V.  Curtis,  217,  358. 


•318 


CASES    CITED. 


[The  figures  refer  to  pages.) 


F'ox  V.  Graham,  489. 

V.  Hanbury,  142.  233. 
Francis,  In  lo.  43. 
Frank  v.  Anderson,  15. 

V.  Blake.  235. 

V.  Hardware  Co..  82. 

V.  Peters,  279. 
Fianklin  v.  Robinson,  168. 
Franklyn.  Ex  parte.  288. 
Fraser  v.  Kershaw,  357,  358. 
Frazer  v.  Lubricator  Co.,  108,  lia 
Frederick  v.  Cooper.  195. 
Freeland  v.  Stansfeld.  19,  357,  358. 
Freeman.  Ex  parte,  254. 

V.  Cari)enter.  221,  229. 

V.  Falrlle.  179. 

V.  Falconer,  200. 

T.  Freeman,  334,  335w 

T.  (rordon,  07. 

V.  Stewart.  335. 
French  v,  Marr<>u,  80i 

V.  Chase,  27f.. 

V.  Donohue,  16. 

T.  Lovejoy,  287. 

V.  Styrinp.  .5.  8,  23,  51,  62,  67.  122. 
Friend  v.  Duryee.  229. 
Fromont  v.  Coupland,  i;2.  122,  303,  317. 
Frothlngliam  v.  Seymour,  17. 
Frout  V.  llnrdin,  «;<;. 
Prow,  Estnte  of,  292,  32a 
Fry,  In  re,  ■"»(»l. 

V.  Potter.  3(»5,  307. 
Puller  V.  Ferguson,  89. 

V.  Miller,  185. 

V.  Perclval,  225,  220.  324. 

V.  Rowe,  72. 
Fuller  &  Fuller  Co.  v.  .McHenry,  16. 
Fulmer's  Ai)peal,  118. 
Fulton  V.  Hughes,  280. 

V.  Maccracken.  109. 

V.   Willi.nms,  22.'.,  .S()3. 
Funk  V.  Babbitt,  227.  228. 
Furnlval  v.  Weston,  224. 


Gable  v.  Williams,  410. 
Gabriel  v.  Evill.  .33.  69,  250. 
Gage  V.  Parmelee,  ic-l),  193. 
Gaines  v.  Beirne,  385. 
Galnesborough  v.  Stork,  191. 


Galcott  V.  Dudley,  40a 
Gale  V.  Leckie.  319. 

V.  Miller,  226. 
Galliott  V.  Bank,  264. 
Gallway  v.  Mathew,  95,  236. 
Galway  v.   Fullerton,  218. 

V.  Matthew,  225. 
Gammon  v.  Huse,  189,  193,  SOflL 
Garbett  y.  Veale.  149. 
Gardiner  v.  Chllds.  232. 

V.  Fargo,  303,  3o4. 
Gardner  v.  M'Cutcheon,  160w 

V.  Towsey,  261. 
Garland.  Ex  parte,  36,  282. 

V.  Hickey,  214. 

V.  Jacomb,  225,  226. 
Garnett  v.  Richardson,  73. 
(Jarretson  v.  Weaver.  352.  365. 
Garrett  v.  Handley,  30(;. 
Garsden  v.  Carson.  288. 
Gartside  Coal  Co.  v.  Maxwell,  72,  73. 
Ga.sely  v.  Society,  88. 
Gass  V.  Railroad  Co.,  06. 
(laston  V.  Drake,  25,  2ab 
(Jates  V.  FIsk.  201. 

V.  Fraser,  21. 

V.  Graliam.  223. 

V.   Huglie.'^.  2;W,  271 
Gay  V.  Sellxild.  109. 

V.  Waltnian.  217. 
(Jnylor  v.  Castle,  398. 
(iearing  v.  Carroll,  430,  444,  449,  462. 
Goddes   v.   Wallace,   18,  03,    185,    189, 

1!M».  194,  202. 
Geddos'  Appeal,   161. 
Gt'llar,  Ex  parte,  36. 
(Jemmell,  Ex  parte,  181. 
George  v.  Carpenter,  465. 

V.  Grant,  483. 

V.  Tate.  2,33. 
Gcortner  v.  Canajoharle,  279. 
Gerard  v.  Basse,  222. 

V.  Bak's,  335. 

V.  Gateau.  406. 
(Jerll  V.  Mainilncturing  Co.,  233. 
German  v.  Moodje.  447. 
Getchell  v.  Foster,  56,  105,  107. 
Gibb  V.  Mershon.  446. 
Glbbs  V.  Bates,  229. 

V.  Humphrey,  275. 

V.  Morrill,  12. 
GIbb's  Estate,  In  re,  10. 


CASES    CITED. 


61^ 


[The  figures  refer  to  pages.] 


Gibson  V.  Goldsmld,  345. 

V.  Lupton.  8. 

V.  Moore.  322.  323. 

V.  Stevens,  143.  148. 

V.  Warden.  222.  288. 
Glddlngs  V.  Palmer.  131.  183. 
Gilchrist  v.  Brande,  262.  263. 
Gilhooly  v.  Hart,  160,  169. 
Gllkerson-Sloss    Commission    Oo.    v. 

Salinger,  15. 
GUI  V.  Geyer,  185. 
Gillaspy  V.  Peck,  292. 
GUle  V.  Hunt,  112. 
Glllen  V.  Peters,  320. 
Gillespie  V.  Hamilton.  153. 
Glllett  V.  Hall.  333.  334. 

V.  Thornton.  196. 
GllUlan  V.  Insurance  Co..  219.  224. 
(illlman  v.  Foote,  272. 

•  Jillow  V.  LlUle.  225. 
Cilman  v.  Cunuingliam,  7,  64. 

V.  Vaughan.  169.  171. 
(xllpin  V.  Kiid»'rl)t'y.  3.').  .".7.  83. 
<; impel  V.  Wilsou,  186.  .'{37. 

•  Made  V.  White,  316. 

<;iasslngtou  v.  Thwaltes,  164.  19i.  208, 

347. 
<Jleadow  V.  Glass  Co..  175. 
(Jleason  v.  Wliite.  300. 
Glo.'<sop  V.  Colnian,  13. 
Glyn  V.  Hood,  155.  398. 
Glynn  v.  Phettophue.  304.  338. 
(ioddard  v.  Hodges.  36.  303.  399. 

V.  Pratt.  ()S.  2rrl,  3'.iL 
Godfrey  v.  Macauley,  2(>4. 

V.  Turnbull.  264. 

V.  White,  166.  170.  172,  178. 
Goell  V.  Morse.  6,  CA. 
Goembel  v.  Arnett.  131,  277. 
Goesele  v.  Blmeler.  88. 
Goldsborough  v.  McWillianjij.  316. 
Goldsmith  v.  Sachs.  31!). 
Goodburn  v.  Stevens.  31»7. 
Goode  V.  Harrison,  11    12.  83. 
Gooding  V.  Underwocd.  243. 
Goodman  v.  Whitcomb,  157.  158,  177, 

178.  352.  354.  .358,  360.  405. 
Goodnow  V.  Lumber  Co.,  12. 

V.  Smltli.  246. 
Goodrich  v.  Wlllard.  6. 
Goodspeed  v.  Plow  Co..  239. 
Goodwin  V.  Einstein,  160. 


Gordon  v.  Bankard.  106. 

V.  Freeman.  219. 

V.  Gordon.  125. 
Gorman  v.  Davis  &  Gregory  Co.,  265. 

V.  Russell,  187,  328,  402,  501. 
Gott  V.  Dinsmore.  502. 
Gottschalk  v.  Smith,  7. 
Gould  V.  Gould.  139. 

V.  Horner.  195. 

V.  Kendall,  28. 
Gowan  v.  Gill.  288. 

V.  Jeffries,  354.  405. 
Grabenlieimer  v.  KindskoflT,  81. 
Grace  v.  Smith,  ;'.0.  .•>4-;58.  41.  MVAS. 
Grady  v,  Robinson,  262. 
Graeff  v.  Hitchman.  238,  239,  241. 
Graham  v.  Holt,  300. 

V.  Hope,  260,  262. 

V.  Meyer,  242. 

T.  Robertson,  366,  386. 
Gram  v.  Cadwell.  149.  224. 

V.  Seton.  223. 
Granger  v.  McGilvra,  237. 
Grant  v.  Bryant,  185. 

V.  Holmes.  2(>8. 

V.  Shurter,  289. 
Graser  v.  Stelhvagen.  221.  233. 
Graves  v.  Insurance  Co.,  220. 

V,  Merry.  264. 
Gray  v.  Chiswell.  273. 

V.  Gibson.  69.  428.  452.  459,  460. 

V.  Haig.  179. 

V.  Palmer.  88.  128. 
Grazebrook.  Ex  parte,  296. 
Cirentrex  v.  Greatrex,  178,  348. 
Great   Western    Ins.   Co.   v.   CunllBfe. 

337. 
Great  Western  R.  Co.  v.  Preston  &  B. 

R.  Co..  43. 
Green  v.  Beesley.  54,  58. 

V.  Brlggs.  8.  184. 

V.  Groenbank.  13. 

V.  Hood,  482,  483. 

V.  Stacy.  334. 

T.  Tanner.  229.  239.  241. 

V.  Waring,  2(i9. 

V.  Wilding.  12. 
Greenboum,  Appeal  of.  274. 
Greene  v.  Breck,  482. 

v.  Surviving  Partners.  125. 
Greenham  v.  Gray.  62. 
Greenslade  v.  Dower,  221.  232. 


520 


CASES    CITED. 


[The  figures  refer  to  pages.] 


Greenup  v.  Barbee's  Ex'r,  501. 
Greenwald  v.  Raster,  268. 
Greenwood  v.  Brodlieal,  335. 
Greenwood's  Case,  50(i. 
Gregory  v,  Patchett,  186. 
Gridley  v,  Conner,  317. 

y.  Dole,  303. 
Griflfpe  v.  Griflfee,  26f). 
Griffen  v.  Cooper,  52. 
Griffin  V.  Cranston.  2S8. 
Griffith  V.  Buff  urn,  6n.  l>3L 

V.  Paget,  187, 

V.  Vanheythuysen,  334. 

V.  Willing.  334. 
Griggs  V.  Clark.  138. 

V.  Day,  443. 
Grigsby's  Ex'r  v.  Nance,  320. 
Grim's  Appeal,  334.  4lu. 
Grlnton  v.  Strong.  56. 
Grlssom  v.  Moore.  115,  128. 
Grlswold  V.  Waddington.  11,  14.  383 

402. 
Groenendyke  v.  CoCfeon.  328. 
Grojan  v.  Wade.  367. 
Grollnian  v.  Llp.^ltz,  l(i6. 
Grosvenor  v.   Lloyd.  I'CS. 
Groth  V.  Payment,  405. 
Grove,  Appeal  of,  101. 
Grover  v.  Smitli,  21S,  233,  3S»-391. 
Guice  V.  Tliornton.  1!)8. 
Guidon  V.  Robson.  82.  364. 
Guild  V.  Belcher.  228. 
Gulllou  V.  Peterson.  2Ht.  4."(it.  471 
GuUck  V.  Gulick,  218.  269,  316. 
Gumbel  v.  Koon.  100. 
Gunn  V.  Railroad  Co.,  18. 
Gunnell  v.  Bird,  416. 
Gurr  V.  Martin,  66. 
Guyton  v.  Flack.  361. 
Gwln  V.  Sedley.  279. 
Gwinn  V.  Rooker.  223. 
Gyger's  Appeal,  168,  411. 


H 


Haas  V.  Shaw,  15. 
Haben  v.  Harshaw,  279. 
Habershon  v.  Blurtoii.  8.35. 
Hackett  v.  Railroad  (D.,  15. 

V.  Stanley,  46.  47.  61. 
Hackwell  v.  Eustman,  334. 


Haddock  v.  Manufacturing  Corp.,  454. 
Hagenbeck  v.  Arena  Co..  64. 
Haggerty  v,   Foster.   4 ».{.   444. 

V.  Taylor.  404.  487,  4l>7. 
Hahlo   V.   Mayer.  So. 
Hahn  v.  lusuninfe  Co..  220. 
Haight  V.  Burr,  359. 
Haines  &  Co.'s  Estate.  In  re.  lOL 
Halderman  v.  Haldernian.  313. 
Hale  V.  Hale,  360. 
Hall,  Ex  parte,  291, 
Hall.  In  re,  69. 

V.  Clagett,  178,  409. 
V.  Edson,  61. 
V.  Glessner.  443,  488. 
T.  Hall.  346.  347,  352-354,  359.  381. 
V.  Jones,  2(30. 
V.  Kimball,  310. 
V.  Lanning.   217. 
T.  I.,ogan.  313. 
T.  Sannoucr.   ISlt.   193. 
V.  West,  227. 
Ilallack  V.  March.  217. 
Unller  v.  Willamowicz.  323. 
Hnllett  V.  Cumston.  335.  336^ 
Hallett's  Estate.  In  re.  268. 
Ilalliday  v.  Carman.  320. 
Ilal.sey  v.  Fairl)anks.  222. 
Ilalstead  v.  Shepard.  391. 
Ilal.sted  V.  Sclimelzel.  299. 
Ilambro  v.  Ofllcial  Manager.  239. 
llamil  V.  Stf)ko!=«.  19.  20. 
Hamill  V.    Ha  mill.  :?57. 
Hamilton.  In  re.  16.  288w 
V.  Ilalpin,  80. 
V.  Hamilton,  15. 
V.  Smith.  71. 
Hamlin  v.  Mansfield.  409. 
Hampden  Bank  v.  Morgan.  448. 
Hamper.  Ex  parte.  36.  37. 
Hamper's  Appeal.  61. 
Hancock  v.  Haywood.  386. 
Hand  v.  Rogers,  373. 
Ilaney  Manuf'g  Co.  v.  Perkins,  243. 
Hanger  v.  Abbott,  402. 
Hanks  v.  Baber,  315. 
Hannegan  v.  Roth,  397,  409. 
Hanslip  V.  Kitton,  140. 
Hanson  v.  Paige,  410. 
Hapgood  V.  Cornwell.  131.  183,  277. 
Hardin  v.  Jamison,  123.  124. 
Harding  v.  Glover,  354^,56,  359. 


CASES    CITED. 


621 


[The  figures  refer  to  pages.] 


Hardt  v.  Levy,  454.  4S9. 
Hardy  v.  Donelhm.  152. 

V.  Mitchell,  278. 
Hare,  Ex  parte,  121. 
Haxgrave  v.  Conroy,  336. 
Hargreaves,  Ex  parte.  281,  283,  291. 
Harland  v.  Lilienthal,  27. 
Hai-man  v.  Johuson.  22(i. 
Harmon  v.  Clark,  183. 
Harper  v.  Fox,  217. 

V.  Goodsell,  218. 

V.  McKinnis,  230. 

V.  Raymond.  4t>y. 
Harrington  v.  Churchward,  334. 
Harris,  Ex  parte.  282. 

V,  Farwell.  27o. 

V.  Fergusson.  5. 

V.  Harris.  120,  21)9,  303. 

V.  Hillegass,  3l>4. 

V.  Murray,  143,  461. 

V.  Peabody,  2S9. 

V.  Vlsscher,  102. 
Harrison.  Ex  parte,  8. 

V.  Armitage,  339.  340. 

V.  Barton,  5. 

V.  Bevington,  371,  372. 

V.  Fitzhenry.  3('.5. 

V.  Jackson,  223.  224. 

V.  Righter,  335. 

V.  Tennant,  405,  406. 
Harrod  v.  Haraer,  72. 
Hart  V.  Alexander.  263.  2t>4,  271. 

V.  Clark.  183. 

V.  Kelley.  43. 

V.  Railroad  Co..  65. 

V.  Withers.  223.  224. 
Hartley  v.  White.  279. 
Hartman  v.  Kendall,  12. 

V.  Woehr.  68.  70.  169. 
Hartman's  Appeal,  274. 
Ilartz  V.  Schrader.  348.  349.  3.52. 
Harvey  v.  Childs.  45,  59. 

V.  McAdams,  218. 

V.  Varney,  172.  332,  3,38. 
Hasbrouck  v.  Childs.  116. 
Haskell  v.  Champion,  loc. 
Hasklns  v.  D'Este.  105-  107,  112. 
Haslet  v.  Kent,  443.  444. 
Hastings  v.  Dollarhlde,  12. 

V.  Hopklnson,  428. 
Hastings  Nat.  Bank  v.  Hibbard,  83. 
Hatch  T.  Wood,  375. 


Hatchett  v.  Blanton,  380. 
Haviland  v.   Chace,  443,  488. 
Hawes  v.  Petroleum  Co.,  72. 
Hawken  v.  Bourne.  419. 
Hawkins  v.  Hawkins,  347. 

V.  Kamsbottom,  386. 
Hawley  v,  Dixon,  43. 

V.  Tesch,  243. 
Hawn  V.  Water  Co.,  409. 
Hawtayne  v.  Bourne,  216,  22a. 
Hayden.  Ex  parte.  288. 

V.  Cretcher,  409. 
Haydon  v.  Crawford.  43. 
Hayes  v.  Bemeut,  461.  486. 

v.  Hayes,  183. 

v.  Heyer.  471,  483.  48a 

V.  Knox,  381. 
Haynes  v.  Brooks.  287. 

V.  Knowles,  143. 
Haythom  v.  Lawson,  371. 
Hayward  v.  Barron,  50. 

V.  French.  229. 
Haywood  v.  Harmon,  234. 
Hazelton  Boiler  Co.  v.   Hazelton  Tri- 
pod Boiler  Co.,  109. 
H.  B.  Clalllin  Co.  v.  Evana.  2ia 
Heap  v.  Dobson,  251. 
Heartt  v.  Walsli,  219,  409. 
Heath  v.  Sansom,  74.  155. 

V.  Waters,  166,  415. 
Ueathcot  v.  Ravenscroft,  360. 
Heaton,  Ex  parte.  241. 
lleckard  v.  Fay.  167. 
Hecker  v.  Fegely,  232. 
Heckman  v.  Messinger.  285. 
Heenan  v.  Nash,  106.  2.19. 
Heffron  v.  Hanaford.  227. 
Heflebower  v.  Buck,  357. 
Heighe  v.  LIttig,  44. 
Heilbut  V.  Nevill.  38^;. 
Helmstrut  v.  Howland.  44, 
Helen,  The.  28. 
Helm  V.  Cantrell.  410. 
Helme  v.  Smith,  8.  319. 
Helmer  v.  Yetzer.  186. 
Helmore  v.  Smith.  346. 
Henderson  v.  Hudson,  22. 

V.  WMld,  219. 
Hendren  v.  Wing,  111. 
Flendry  v.  Turner,  411. 
Ilenkel  v.  Heyman.  422. 
Henn  v.  Walsh,  358. 


522 


CASES    CITED. 


[The  figures  refer  to  pages.] 


lleuuessy  v.  Bank,  UIH. 
Henry  v.  Bassett,  138.  139. 

V.  Jackson,  189. 
Hercy  v.  Birch,  76. 
Hermann  Loog  v.  Bean,  348. 
Heroy  v.  Van  Pelt  2<n. 
Herrick  v.  Borst,  478. 
Herring  v.  Waln^und,  27. 
Her.shlield  v.  Claflin.  145.  403. 
Hesham,  Ex  parte,  291. 
Hesketh  v.  Blaucliard,  36. 
Heslln  V.  Hay,  118 
Hess  V.  Ferri.s.  82. 

V.  Final.  :5f>4. 
Hewett  V.  Hatch.  503. 
Hewitt  V.  Kuhl.  304. 
Heydon  v.  Heydon.  142-14.'i. 
Hey  hoe  v.  Burge,  30,  59. 
Heyne  v.  Middlemoro.  liM. 
Hichens  v.  Congrevc.  101.  339. 
Hicks  V.  Rus.sell.  410. 
HIggins  V.  Senior.  377. 
Hill,  Ex  parte.  2.S.S.  289. 
V.  Bench.  IKi,  294,  295. 
V.  McPher.son.  .303. 
V.  Paliiicr.  319.  321. 
V.  Sheibley.  00. 
V.  Stetler.  442.  443. 
V.  Wiggin.  149. 
Hllllker  v.  Ix)op,  304,  369. 
Hlllman  v.  Moore.  276. 
Hill  Manuf'g  Co.  v.  Boston   &  L.   R. 

Corp.,  65. 
Fllllock  V.  Insurance  Co.,  219,  220. 
Hills  V.  Bailey,  303. 
Hillyard  v.  Mutual  Ben.  Life  Ins.  Co., 

402. 
Hilton  V.  VanderbilT.  219,  409. 
Hinds,  Ex  parte,  290. 
Hiuk.son  v.  Ervin.  3,30. 
Hircch  v.  Vanuxem,  454. 
Hisc-ock  V.  IMu'lps,   115.  137.  181. 
Hitcliings  v.  Ellis,  32,  61. 
Hite  .Natural  Gas  Oo.'s  Appeal,  451. 
Flite's  Heirs  v.  Hite's  Ex'rs,  329. 
Hoard  v.  Clum,  2.58,  397. 
Hoare  v.  Bank  Corp.,  277. 

V.  Dawes.  5.  7. 
Hobart  v.  I'.nllard.  08,  361. 
Hobbs  V.  .McLean,  28.  180,  182. 

V.  Wayet.  176. 
Hodgkiuson,  Ex  parte,  222. 


Hodg.son,  Ex  parte,  285. 
Hodgson,  In  re,  273. 
V.  Baldwin,  501. 
HoCf  V.  Rogers,  301. 
Hoffman  v.  Smith,  266. 
Hogarth  v.  Latham.  217.  221,  228. 

V.  Wherley,  220. 
Hogg  V.  Ellis,  4.58.  4.59.  474. 

V.  Orgill.  228,  428.  443,  466,  470. 
Hoile  V.  Bailey,  380. 
linker  v.  Boggs,  15. 
Holbrook  v.  Insurance  Co.,  73,  100. 
V.  Lackey.  13b. 
V.  Nesbitt.  412. 
V.  Oberne.  44. 
V.   Wight.  234. 
Holdaue  v.  Butterworth,  264. 
Holden  v.  Bloxuni,  km;. 

V.  French,  44. 
Holden's    Adm'rs    v.    McMakIn,    3.5M 

3.59.  412. 
Holderness  v.  Shackels.  180,  184.  28-1 
Hole  V.  Bradbury.  104.  :i83. 

V.   Hurrison.  173. 
HnliJlold  V.  White.  43.  m. 
Holladay  v.  Elliott,  4(m;. 
Holland  v.  Fuller,  128. 
V.  Long.  83.  107,  2tJ0. 
V.  Teed,  103. 
Holliday  v.  Paper  Co.,  4L'3,  442,  444 
Hollom  V.  Whichelow,  49, 
HoUoway  v.  Holloway.  108. 
Holnian  v.  Nance.  315. 
Holme  V.  Hammond.  ,39,  46.  49. 
Holmes  v.  Burton.  232. 

V.   Higgins.  71.  299.  303,  50L 
V.  .Tarrett.  127. 
V.  McCray.  21.  22. 
V.  Moon.  120. 
V.  Railroad  Co.,  44,  60. 
Holmes'  Appeal.  415. 
Holroyd  v.  Griffiths.  184. 
Holt  V.  Blake,  501. 
V.  Kernodle,  02. 
Holtgreve  v.  Wintker,  260,  263. 
Holton  V.  Holton,  287. 
Holyoke  v.  Mayo,  320. 
Homberger  v.  Alexander,  263. 
Homer  v.  Wood,  389.  390. 
Homfray  v.  Fothergill,  208,  845w 
Hood  V.  Aston,  348. 
Hooper  t,  Keay,  267. 


CASES    CITED. 


):^3 


[The  figures  refer  to  pages.] 


Bopkins  v.  Carr,  2iJ9. 
Horn  V.  Bank,  211),  -226. 
HoruefTer  v.  Duress,  15. 
Horrell  v.  Witts,  357. 
Horsley  v.  Bell,  252. 
Horton's  Appeal,  39S,  403. 
Hoskinson  v.  Eliot,  223. 
Hosmer  v.  Burke,  101. 
Hotchin  v.  Kent.  215. 
Hottenstein  v.  Courad.  360, 
Houghton  V.  Puryear,  10. 
Uouseal's  Appeal,  2S1,  2i>3. 
Houston  V.  Stanton,  89. 
How  V.  Kane,  272. 
Howard,  In  re,  275. 

V.  Patrick,  303. 
Howdeu,  Ex  parte,  219. 
Howe  V.  Howe,  50,  121. 

V.  Lawrence,  130.  2S0.  288. 

V.  Savory,  364. 

V.  Sluiw.  37S. 

V.  Thayer,  200.  2G4. 
Howell  V.  Adams,  240,  201,  202. 

V.  Harvey.  o'JO. 

V.  Reynolds,  380. 

V.  Teel.  292. 
Howes  V.  Fiske,  85. 
Howland  v.  Bethune,  495. 

V.  Davis,  234. 
Hoyt  v.  Sprague.  136.  180,  182,  328. 
Hubbard  v.  Curtis.  152.  3;{5,  354. 

V.  Galusha.  2.34. 

V.  Guild.  209. 

V.  Matthews,  68,  409. 

V.  Moore,  218.  405. 

V.  Morgan,  447. 
Hubbardstuu    Lumber   Co.    t.    Bates. 
23'!. 

V.  Covert,  101. 
Hudson  V.  McKenzle,  233. 
Hughes  v.  Gross.  252,  380,  397. 
Hulskamp  v.  Wagon  Co..  129-131. 
Hull  V.   William  Deering  &  Co.,  281. 
Humble  v.  Huuter.  307,  3<".8. 
Hunt  V.  Chapin,  225. 

V.  Erikson.  01. 

V.  Gorden.  333. 

V.  Hall.  2<;i. 

▼.  Reilly.  321. 

V.  Royal  Exchange  Assurance,  2^0. 

▼.  Semonin,  106. 


Hunter,  Ex  parte,  275. 

V.  Courad,  44. 

V.  Dowling,  415. 

V.  Pfeiflfer.  25,  28, 

V.  Waynick,  234. 
Huntington  v.  Potter.  224, 
Huntley  v.  Huntley,  21. 
Hurd  v.  Haggerty,  220. 
Hurley  v.  Walton,  7,  64. 
Hurt  v.  Salisbury,  73. 
Huston  V.  Noil,  115. 
Hutchins  V.  P.ank,  262. 

V.  Hudson,  200. 

V.  Turner,  236. 
Hutchinson  v.  Dubois.  143. 

V.  Whitfield,  209. 

V.  Wright,  33S. 
Hutton  V.  Eyre,  246,  268. 

V.  Laws.  334. 


I 


hidings  V.  Plerson,  107. 
Ihmsen  v.  Lathrop,  82.  83. 

V.  Negley,  220. 
Illingworth  v.  Parker.  59. 
Ingals  V.  Ferguson,  9. 
Inues  V.  Lansing,  480,  482. 
Insley  v.  Shire.  166. 
Insurance  Co.  v.  Railroad  Co.,  66. 
Interstate  Mut.  FUe  lus.  Co.  v.  Brown- 
back.  500. 
Irby  V.  Vlniiig.  203. 
Irvin  V.  Railway  Co.,  64,  66. 
Irvine  v.  Forbes,  1,")'.». 
Irving,  In  re.  227. 
Irwin  V.  Bid  well.  45.  69.  250. 

V.  WlUiar.  214,  215,  219.  231. 
Isler  V.  I'.aker,  14,  257. 
Ives  V.  Miller.  299.  300,  303,  804. 
Ivy  V.  Walker,  302. 


Jackson,  Ex  parte.  253. 
V.  Association,  28. 
T.  Crapp,  115.  116.  416. 
V.  Jackson,  123. 
V.  Sedgwick,  189,  190,  194. 
V.  Sheldon.  482. 
V.  Stopherd,  321,  323. 


524 


CASES    CITED. 


[The  figures  refer  to  pages.] 


Jackson  Bank  v.  Durfey,  132,  278. 
Jacksonville,  M.  P.  Ry.  &  Nav.  Co.  v 

Warriner,  411. 
Jacky  V,  Butler,  144,  145. 
Jacomb  v.  Harwood,  273. 
Jacquln  v.  Buisson,  359,  422,  428,  489, 
Jaffe  V.  Krum,  486. 
Jaffray  v.  Frebain,  12. 
James,  lu  re,  171. 
V.  Stratton,  68. 
V.  Vanzandt,  278. 
Jauney  v.  Sprinijer,  182. 
Jansen  v.  Grlmshaw,  262. 
Janson,  Ex  parte,  280. 
Jaques  v.  Hulit,  315. 
Jaquin  v.  Buisson,  359,  410. 
Jarvis  v.  Brooks,  125,  287,  293. 

V.  Hyer,  143. 
Jauncey  v.  Knowles,  19. 
JeCferys  v.  Smith,  154,  155,  208,  359, 

398,  399. 
Jenkins  v.  Blizard,  263. 

V.  Jenkins,  12. 
Jennings'  Appeal,  158. 
Jennings'  Adm'rs  v.  Chandler,  334. 
Jervis  v.  White,  348. 
Jessup  V.  Carnegie,  73. 
Jestons  V.  Brooke,  35. 
Jewell  V.  Ketchum,  320. 
Jewett,  In  re,  288. 
Johnson  v.  Barry,  2'_M,  232. 
V.  Brenheim.  237. 
V.  Crlchton,  390. 
V.  Evans,  14:5,  1+4. 
V.  Hartshornp.  1G8,  17L 
V.  Kelly,  299. 
V.  King,  144. 
V.  McDonald,  423. 
r.  Miller,  45. 
V.  Totten,  260. 
V.  Wilson.  303,  304. 
V.  Young,  271. 
Johnson's  Appeal,  162. 
Johnston  v.  Button's  Adm'r,  159.  236, 
237. 
V.  Straus,  335. 
V.  Warden,  31. 
John  V.  Farwell  Co.  v.  Stock,  27& 
Jones  V.  Blun,  102. 
V.  Butler,  116. 
V.  Dexter,  136,  161, 
T.  Foster,  409. 


Jones  V.  Harraden,  .SOa 

V.  Lloyd,  404. 

V.  Lusk,  131. 

V.  McMichaol.  2L 

V.  Morehead,  ol9. 

y.  Murphy,  59. 

V.  Neale,  132. 

V.  Thompson,  152. 

V.  Walker,  43,  258,  259. 

V.  Yates,  149.  3S9. 
Jons  V.  Perchard,  28. 
Jordan  v.  Miller,  21,  357. 
Judd  Linseed  &  Sperm  Oil  Co.  r.  Hub- 
bell,  245. 
Judge  V.  Bnisweli,  231. 
Judy  V.  Storage  Co.,  409. 
Jurgens  v.  Ittmann,  106,  395. 
J.  &  H,  Clasgens  Co.  v.  Silber.  252. 


K 

Kahley,  In  re,  278. 

Kahn  v.  Smelting  Co.,  7,  75.  92,  153» 

398,  503. 
Kaiser  v.  Bank,  73. 
Kallonbach  v.  Dickinson,  220. 
Kaskaskia  Bridge  ('o.  v.  Shannon,  220. 
Katz  V.  Brewington.  3<;0. 
Kay  V.  Johnston,  5,  184. 
Kean  v.  Jolmsou,  1.59,  346L 
Keaton  v.  Mayo,  416. 
Keck  V.  Fisher,  223. 
Keegan  v.  Cox,  229,  230. 
Keiley  v.  Turner,  1G6,  170. 
Kelser  v.  State,  44. 
Kedth  V.  Keith,  12<J. 
Kell  V.  Nainby,  82,  364,  365. 
Keiley  v.  Greenleaf,  178. 

V.  Hurlburt,  265. 
Kellogg  V.  Moore,  320. 
Kellogg  Bridge  Co.  v.  U.  S.,  500. 
Kellogg  Newspaper  Co.  v.  Farrell,  41 
Kelly  V.  Gaines.  44,  57. 

V.  Hutton,  156. 

V.  Scott.  129. 
Kemble  v.  Kean,  347. 

V.  Mills,  201. 
Kemp  V.  Andrews,  384. 

V.  Cook,  13. 
Kemptner,  In  re,  131. 
Kendall  v.  Hamilton,  289. 


CASKS    CITED. 


526 


[The  figures  refer  to  pages.] 


Kennedy,  Ex  parte,  289. 

V.  Bank,  278. 

V,  Boliannon,  261. 

V.'  Budd.  108. 

V.  Kennedy,  1S5.  358,  405. 

V.  M'Fadon,  300. 
Kennej-  v.  Altvater,  232,  200. 
Ivensington,  Ex  parte,  104. 

V.  Taylor,  289. 
Kent  V.  Holliday,  373. 

V.  Mojonier,  108. 
Kenton  v.  Chaplain,  856. 
Kenworthy  v.  Sawyer,  24fl. 
Kerr  v.  Blodgett,  4S3. 

V.  Franks,  2()0. 
Kerrick  v.  Stevens,  69. 
Kershaw  v.  Matthews,  360. 
Ketcham  v.  Clai'k,  262. 
Ketchum  v.  Durkee,  130,  280. 
Kiffin  V.  Willis,  268. 
Kilgore  v.  Bruce,  243,  388. 
Kilpatrlck  v.  Mackay,  138. 
Kilshaw  v.  Jukes,  51,  54,  57. 
Kimball  v.  Insurance  Co.,  234. 

V.  Lincoln,  1G8,  411,  415. 
Kimbro  v.  Bullitt,  214,  224,  225. 
Kimmin?  v.  Wilson,  17. 
King,  Ex  parte,  284,  296. 
King,  In  re,  491. 

V.  Chuck,  195.  345. 

V.  Faber.  228. 

V.  Hamilton,  122,  166,  172. 

V.  Manning,  144. 

V.  Sanderson,  150. 

V.  Sarrla,  419^,  428. 

V.  Timstall,  230. 

V.  Whichelow,  56. 

V.  Winants,  25,  28, 
Kingman  v.  Spurr.  150,  499. 
Kingsbury  v.  Tharp,  33. 
KingslaJid  v.  Braisted,  502. 
Kinkead,  In  re,  15. 
Kinloch  v.  Hamlin,  321. 
Kinney  v.  Robison,  304,  319. 
Kinsman  v.  Dallam,  239. 
Kirby  v.  Hewitt,  31,  106. 

V.  McDonald.  229. 

V.  Schoonmaker,  278. 
Kirk  V.  Blurton,  lOG,  239. 

V.  Hodgson,  159. 
Kirkman  v.  Snodgrass,  260. 
Klrkwood  v.  Cheetham,  81. 


Kitner  v.  Whitlock.  105,  107,  226. 

Kleinhaus  v.  Generous,  229. 

Klemm  v.  Bishop,  2o3. 

Kline  v.  Beebe,  12. 

Kling  V.  Tunstall,  230. 

Kuapp  V.  Edwards,  117,  178. 

Knard  v.  Hill,  85. 

Knebell  v.  White,  338,  MO. 

Knerr  v.  Hoffman,  143,  315,  335. 

Knight,  In  re,  288. 

Knott  V.  Knott,  15. 

Knowles  v.  Haughton,  28,  839,  341. 

V.  Hull.  15 
Kuowlton  V.  Rud,  409. 
Knox  V.  Gye,  135-137. 
Koehler  v.  Brown,  316. 
Kohler  v,  Lindenmeyr,  443,  451. 
Kootz  V.  Tuvian,  58. 
Kramer  v.  Arthurs,  149. 
Krans  v,  Luthy,  85. 
Krapp  V.  Aderholt,  169. 
Kritzer  v.  Sweet,  83. 
Kruschke  v.  Stefan,  121. 
Kutz  V.  Dreibelbis,  303.  307. 


Labouchere  v.  Tupper,  36,  258. 
Lacey  v.  Hill,  176,  268,  290. 
La  Chaise  v.  Lord,  482. 

V.  Marks,   430,  466,  467,   469,   472. 
489. 
Lachomette  v.  Thomas,  456,  460. 
Lacy  V.  Kinaston,  268. 

V.  Le  Bruce,  311. 

V.  Woolcott,  226. 
Laflin  &  Rand  Co.  v.  Steytler,  449. 
Lafond  v.  Deems.  25. 
Laing  v.  Campbell,  206. 
Laird  v.  Ivens,  263. 
Lake  v.  Duke  of  Argyll,  87. 

V.  Gibson,  5. 

V.  Munford,  499,  503. 
Lamalere  v.  Caze,  300. 
Lamb  v.  Durant,  221,  233. 

V.  Singleton,  261. 
La  Mont  v.  Fullam,  44,  64. 
Lamport  v.  Miller,  122,  278. 
Lancaster  v.  Choate,  452,  458,  459,  483. 
Lancaster  Bank  v.  Myley,  149. 
Lancaster  County  Nat.  Bank  v.  Bof- 
fenmyer,  80. 


)2G 


CASES    CITED. 


(The  figures  refer  to  pages.] 


l^ane.  In   re,  283. 

V.  Bishop,  15. 

V.  Roche.  319. 

V.  Tyler,  202. 

V.  Williams.  268. 
l.anfear,   Kx  parte.  2>*4. 
Lange  v.  Kennedj",  409. 
(.au;;mead's  TrusLs.  In  re.  1S2.  1S8. 
I.anslug  V.  (^aine,  2*'A. 
La.st   V.   Assurance   Corp..   185. 
Latham  v.  Simmons.  142,  143. 
I.atta  V.  Kllbourn.  <J:>. 
I. aw  V.  Ford.  .TtfJ. 
Lawless  v.  Sullivan,  185. 
Lawrence  v.   Batcheller,   428. 

V.  Clark.  3W.  310. 

V.   Fox.  2r»5. 

V.   MorrlHohl.  442. 

V.  Tru.st<e.<*.   2.sn. 
Lawson  V.   Hank.  111. 

V.  Morjran.  32.s.  349. 
Laylln  v.  Knfix.  271. 
Leadbltter  v.    Farrow,  378. 
Leaf  V.  Coles.  4(M. 
Leak  v.  MacDdwall.  HKi. 
Learned  v.  Ayres.  ;^'M>. 
L«'ary  v.  Shout,  4<h;. 
Lcavitt  V.  Fe«>k,  2:{t;.  237. 
Lfbeck  V.  Shaftoe.  .•{«i(i. 
Lee  V,  Abranis,  'XV.\. 

V.  Bank,  1>1. 

V.   LashbronUo.  17(t,  171. 

V.  Wilkins.   \4'y. 
I^ees  V.  I.aforest,  ic.i. 

V.   Smith,   2(5. 
l-ee's  Ex'x  v.  Dolan's  Adm"x,  17Z 
1/e  Fanu  v.  Malcolms<in,  372. 
Ix?fever  v.  I'nderwood.  324. 
Lefevre  v.  Boyle,  :'.<>".•. 

V.  Castai^nlo,  43. 
Lefevre's  Appeal,  22. 
Lefroy  v.  IJore,  172. 
Lep^rett  V.  Hyde,  31.  44,  4fl,  47,  51. 
Leiden  v.  Lawrence,  219. 
Leidy  v.  .Messiiiger,  ;i()3. 
LeifrhtoD  V.  Clarke,  334. 
Lempiiere  v.  Lange,  13. 
Leugle  V.  Smith.  59,  HO. 
Le  Roy  v.  Johnson,  105,  214.  239,  241, 

263. 
Leslie,  In  re,  184. 

T.  Wiley,  374.  378. 


Leverson  v.  L.aiie,  227. 
Levi  V.  Latham,  225. 
Levlne  v.  Michel.  347. 
Levy  V.  I^ey.  477. 

V.   Lock.  422,   423. 

V.   P\-ni',  225. 

V.  Walker,  lOS.  110,  4UL 
Lewis,  In  w.  2l>2,  293. 

T.  fJraham,  471. 

▼.  Harrison,  183. 

V.   Hawkins.  12S. 

V.   Reilly,  22t>. 

V.   U.  S..  2^2. 
Liberty  Sav.  Bank  v.  Campbell.  390. 
Li-are  v.  I'eacock.  138,  13;>.  H'.U.  3tM 
Lili  v.  F.;:an.  10«;,  107. 
Lilley  v.  Bailey,  444. 
Lilliendahl   v.  Ste>;malr.  3:i4. 
Lincoln  Sav.  Bank  v.  Gray.  240. 
Linderman  v.  Uisbrow.  301. 
Llml.say  v.  (Jibbs.  l.">t;.  1.S4. 

V.   Race,  12(». 
LIndus  V.  Bradwell,  370. 
Llneweaver   v.   Slaglc.  443,  471. 
l.infiird  V.  Lliifonl.  147. 
Lln>,'en  v.  Simpson.   134,  183,  345. 
LiiiU'ond  V    Fade.  209. 
Llntner  v.  Millikin.  44. 
Linton  V.  Hurley,  247. 
Llpjiincott  V.  Carriage  Co.,  112,  373. 
Litchfield,  In  ro,  2.SS. 
LIttIo  V.  Clarke,  200. 
Littlowoo<l  V.  Caldwell,  850. 
Liverpool   Borough   Bank   v.   Walker, 

2 1  '>. 
Liverpool    Ins.   Co.    v.   Massachusetts, 

51  >2. 
Llvin-ston  v.  Blanchard,  115,  41ft. 

V.  Lynch,  158,  104. 

v.  Ralli.  200. 

V.  Roosevelt.  149,  214. 
Lloyd,  In  re,  274.  279,  28a 

V,  Ash  by,  239. 

V.  Carrier,  169.  170. 

V.  Loarlng.  24,  157. 
Locke  v.  Lewis.  221    ii8,  461. 
Lockwood  V.  Bartlett.  244. 
Lodge.  Ex  parte.  270.  282.  290. 

V.  Dicas.  270. 

V.  Prichard.  289. 
London  .\ssur.  Co.  v.  Drennen,  32,  68, 
122. 


CASES    CITED. 


527 


[The  figures  refer  to  pages.] 


London   Financial   Assn   t.    Kelk,  8, 

206. 
Long.  In  re.  297. 
Loomis  V.  Armstrong,  168,  411. 

T.  Barker.  249. 

T.  McKenzle,  358. 

V.  ilarsball.  7,  43,  50,  60,  6a 
Lord  V.  Baldwin,  276. 

V.  Deven<lorf,  285. 

T.  Parker,  15. 

T.  Peaks.  299. 

V.  Proctor,  45.  48. 
Lord  Craven  v.  Widdows,  275. 
Lord  Galway  v.  Matthew.  225. 
Loscombe  v.  Russell.  338,  3-10. 
Ix)ui8ville  &.  N.  R.  Ck).  v.  Alexandef, 

15. 
I.ove  V.  Payne,  154. 

V.  Rbyne,  304. 
Lovegrove  v.  Nelson.  62.  154.  20S. 
I..ovejoy  V.  Bowers.  287. 

V.  Spafford.  263,  2G4.  408. 
Lovell  V.  Beauchanip,  13. 
Low  V.  Holmes,  352. 
Lowe  V.  Penny,  260. 
l.owenstein  v.  Flaurand,  223. 
Lower  V.  Denton,  :',(X). 
I.ucas  V.  Bank.  2t>l. 

V.  Beach,  71,  .'lOS. 

V.  Delacour.  36.S. 
Lucht  V.  Behrens,  2.">9. 
Luckombe  v.  Ashtdn.  24. 
Luddlngton  v.  Bell,  269. 
Ludlow  V.  Cooper,  335. 
Luff  V.  Horner,  130. 
Lyeominj,'  Ins.  Co.  v.  Barrlnger,  68. 
Lyman   v.  layman,  SS. 
Lynch  v.  Hillstrom.  214. 
Lyndon  v.  Oorham.  144,  146. 
Lyon  V.  Johnson,  264. 

V.  Knowles,  8,  50.  63.  66. 

V.  Tweddell.  20,  405. 
I^yons  V.  Murray,  303. 


M 


Mabbett  v.  White.  233. 
McAdam's  Ex'rs  v.  Hawes,  11,  28. 
-McArthur  v.  Chase,  477. 
V.  Ladd,  45,  60. 


McBride  v.  Hajran,  222. 

V,  Rlcketts,  59. 
McCall  V.  Moschowitz.  41i 

V.  Moss,  ISO.  204,  398. 
McCartey  v.  Nixon.  410. 
McCarty  v.  Stauwlx.  361. 
McCauley  v.  Gordon,  106. 
McClurg  V.  Howard,  261. 
McClurkan  v.  Bycrs,  234. 
McConejjhy  v.  Kirk,  106,  221. 
McConnell  v.  Hector,  11,  388. 

V.  Wllkins,  227. 
McCord  V.  Field.  17. 
McCormick  Harvesting  Mach.  Co.  t. 

Coe.  217. 
McCoy  V.  Llghtner,  220. 
McCrudcn  v.  Jonas,  274. 
M'Culluh  V.  Dashieirs  Adm'r,  286. 
McCutchon  V.  Davis.  142. 
.McDounid  V.   Beach,  279. 

T.  Eggleston,  222. 

V.  Fairbanks,  28L 

T.  Matney,  32,  58. 

V.  Richardson,  415. 
McDonnell  v.  House  Co.,  43. 
McElroy  v.  Swope,  22. 
M.i:ivey  V.  Lewis.  352,  357.  358,  360. 

:v.H\. 

McEwen,  In  re,  279,  288,  289. 

V.  Slianuon,  244. 
M'Faddeu  v.  Hunt,  303. 
Macl'arlane  v.  MacFarlane,  5,  301. 
McFerran  v.  Filbert.  204. 
McGahan  v.  Bank.  230. 
McGehee  v.  Dougherty,  315. 

V.  Powell,  427,  452. 
MacGeorge  v.  Manufacturing  Co.,  497 
MMileu.sey  v.  Cox,  154,  208. 
McGowan  Bios.  Pump  &  Macli.  Co.  \ 

McGowan,  846. 
McCJri'por  v.  Bainbrldge.  138,  140. 

V.  Cleveland,  105,  107. 

V.  Ellis,  230. 
McGrew  v.  Walker,  31,  3.':. 
Machinists'  Nat.  Bank  v.  Dean,  898. 
McTlreath  v.  Margetson,  17B. 
M<-Intire  v.  Yatos.  285,  287. 
Mflntyre  v.  Miller.  205. 
M'lver  V.  Humble,  81. 
Mack  V,  Woodruff,  183. 
McKasy  v.  Huber,  63. 


528 


CASES    CITED. 


[The  flj;ure8  refer  to  papes.J 


Mackay  t.  Bloodgood,  222,  223,  23«. 

V.  Joy,  410. 

V.  Rutherford.  21, 
McKee  v.  Cowles,  394. 
McKelvy'B  Appeal.  403. 
McKenna,  Ex  parte,  12i. 

V.  Parkes,  19,  'MM. 
McKewan's  Ca.se,  173. 
Mackey  v.  Auor.  .".l.">. 
McKinney  t.  Baker,  131. 
McKnlght  V.  McCutchen.  300. 

V.   K;ircliflf,  4/>*l 

V.  Wilkins.  222,  238. 
.Maclae  v.  Sutherland.  225. 
MacLaren  v.  StalntMii.  187. 
M'Laurln  v.  M'CoIl,  m. 
McLean,  In  re,  279. 
McLinden  v.  Went  worth,  229. 
McLure  v.  Ripley.  ICl,  332. 
MeMalion  v.  MeCIernan.  390. 

V.  Rauhr,  503. 
McNair  v.  Rewey,  240. 
Mc.N'eish  V.  O.nf  ('....  .S97   ."iOS. 
McPheraon  v.  Robert .s(in.  320. 
McSherry  v.  Brooks.  317. 
McStea  v.  Matthews,  68. 
Macy  V.  Coiiib.s.  44. 

V.  De  Wolf.  0. 
Maddeford  v.  Aiistwlrk.  101. 
Maddlck  v.  Mnrshall,  82. 
Madgwick  v.  Wimble,  207.  351,  359. 
Madison  County  Bank  v.  GouM,   l<;ri. 

467.  470,  474. 
-MMlllyn  V.  Hathaway.  l.'^2. 
MaKilton  V.  Stevenson.  174. 
Majjlnn  v.  Lawrence.  443. 
Mngovern  v.  Robertson,  61,  62. 
Maher  v.  Bull.  :{.j9. 
.Malr  V.  Glennie,  (35. 
Major  V.  Hawke.s,  219,  409. 
Mallory  v.  Oil  Works,  16. 
Maloney  v.  Bruce.  444. 
Manchester  v.  Matliewson,  137. 
Manegold  v.  Grange,  194. 
Manhattan    Brass   Co.    v.    AUIn,   443, 

460. 
Manhattan   Brass  &   Manuf'g  Co.   v. 

Sears,  82,  59. 
Manhattan  Co.  v.  Lalmbeer,  433. 

V.  rhillips,  42r..  437. 
Mann  v.  Butler,  503. 

V.  Hlgglns,  181. 


M:uin  V.  Taylor,  66. 
Manning  v.  Hays.  233. 

V.  William.'^,'  385. 
Manufacturers'  Bank  v.  Mathews,  228. 
Marble  Co.  v.  Ripley,  350,  355. 
Marine  Bank  v.  Ogiien.  16. 
Marks  v.  Hastings,  244. 

V.  Hill.  270. 
Marlett  v.  Jackraan.  226.  2f58. 
Martiuand  v.  President,  etc..  of  New 
York  Manuf  g  Co.,  115.  142.  150.  398, 
400,  404.  416. 
Marriott  v.  Shaw.  144.  145. 
Marsilen  v.  Kaye.  354. 

V.  Moore,  201. 
Marsh  v.  Bennett,  IBS. 

V.  Davis.  22. 

V.  Insurance  Co.,  56. 

V.  Rus.-sell,  29.  58. 
Marshall  v.  Colman,  157.  158.  327.  849. 
iUS,  405. 

V.  Johnson,  340.  347. 

y.  I>nnibeth.  4X7.  490. 

V.  Wat.«;on.  347.  34S. 
Marsh's  Appeal.  167.  177. 
Marten  v.  Van  Schakk,  356,  30a 
Martin  v.  Baird.  70. 

V.  Cronipe,  384. 

y.  Cropp,  .'iO. 

V.  FewcU,  73. 

y.  K  a  (Troth.  31. 

T.  Morris,  12.1. 

V.  Soarles.  2<'A, 

y.  Walton.  2rA. 
Martyn  v.  Gray,  80,  84. 
.Mar wick.  In  re,  289. 
Ma.son  V.  Connell,  154,  394. 

y.  Dawson,  412. 

V.  KIdred,  216,  247,  271,  272. 

V.  Ilackett.  44. 
Massoy  v.  Tingle,  1.37. 
Master  v.  Kirton,  .^.3.3. 
Mast«'rs  V.  Lauder.  465. 
Mather's  Ex'r  v.  Patterson,  113. 
Matliewson  v.  Clarke,  335. 
Matlack  v.  James,  125. 
Matthews  y.  Adams,  170,  173,  416. 

V.  Hunter,  126. 

V.  McStea,  402,  404. 
Mattingly  v.  Moore,  233. 

V.  Stone's  Adra'r,  1(50. 
Mattison  y,  Demarest,  471,  485,  489. 


CASES    CITED. 


529 


[The  figures  refer  ro  pages.] 


Maude.  Ex  parte,  29B. 
M:iugbam  v.  Sbarpe.  107. 
Mauldin  v.  Branch  r.nuk.  263,  264. 
Mauney  v.  Coit.  -io,  410. 
Maxwell  V.  Jameson,  176. 
May.  Ex  parte.  294. 
May,  In  re.  279. 
Mayer  v.  Soyster.  15. 
Mayhew  v.  Herrlck.  143,  145. 
Mayhew's  Case.  154. 
Maynard  v.  Kailey.  3G0,  36L 
Mayou,  Ex  parte,  131. 
Mayrant  v.  Marston,  59. 
Mead  v.  Bank,  297. 

V.  Shepanl,  218.  231. 
Meador  v.  Hughes,  1<>,  61. 
Meagher  v.  Keed.  09. 
Meaher  v.  Ck)x,  58.  154.  209. 
Meason  v.  Kalne,  70. 
Mechanics'  Bank  v.  Foster,  22.'». 
Medbury  v.  Watson,  371. 
Medlll  T.  Collier.  73. 
Meech  v.  Allen.  28r>,  292,  293.  41 ». 
Meehan  t.  Valentine.  2,  43,  50-&2.  54. 

101. 
Megarey,  Ex  parte.  295. 
Mehlhop  V.  Rae.  12.  13. 
Meily  v.  Wood,  101.  149. 
Mt'Uorucchl  v.  Assurance  Co.,  183. 
Mfllersh  v.  Keen.  167.  412. 
Mellor  T,  Lawyer.  2.")1. 
Menage  v.  Burke.  112. 
Menagh  v.  Whitwell.  134.  137. 
Meneely  v.  Meueely.  108. 
Merceln  v.  Andnis,  214. 
Merchant  Banking  Co.  of  London   r. 

Merchants'  Joint  Stock  Bank.  111. 
Merchants'  &  Manufacturers'  Bank  v. 

Stone,  72. 
Merchants'  &  Traders'  Bank  v.  Col- 
gate, 453. 
Merlden  Nat.  Bank  v.  Gallaudet,  105. 
Merrall  v.  Dobbins.  4<). 
Merrick  v.  Bralnard,  154,  398. 

T.  Gordon,  03. 
Merrill.  In  re.  423,  444. 

V.  Blanchard.  259. 

▼.  Green.  255,  32a 

V.  Wilson.  483. 
Merrltt  v.  Day,  261. 

V.  Dickey.  410. 

V.  roiiys.  21  ;i. 

GEO.PART.— 84 


Merrltt  v.  Williams,  262. 
Mersereau  v.  Norton,  135. 
Mershon  v.  Hobensack,  107,  373. 
Meserve  v.  Andrews,  61,  172,  186. 
Metcalf  V.  Bruin,  103. 
Metcalfe  v.  Rycroft,  366. 
Metropolitan    Nat.    Bank    t.    Gruber, 
446. 

V.  ralmer.  443,  465,  470. 

V.  Si  net.  442. 
Metropolitan   Saloon   Omnibus  Co.   t. 

Hawkins.  371. 
Meyer  v.  Krohn.  16.  79.  261. 
Michael  v.  Workman,  106,  238. 
Mick  V.  Howard.  106. 
Mickle  V.  Teet.  303. 
Mimin  V.  Smith.  195,  228,  24a 
Mllburn  v.  Codd.  303. 
Miles  V.  Thomas.  'S47. 
Miles  Co.  V.  Gordon,  64. 
Miller  v.  Bailey.  320. 

V.  Bank.  226. 

V.  Brlgliam.  156,  338t 

V.  Clarke.  285. 

V.  Glass  Works,  213. 

V.  Gunderson,  277. 

T.  Hines,  225. 

V.  Hughes,  44. 

V.  Jones,  334,  358,  359,  4ia 

V.  Lord.  170,  332. 

V.  Mackay,  165. 

y.  Manice,  228. 

V.  Marx.  15. 

V.  Perrine.  234. 

V.  Price.  391. 

V.  Kapp,  79. 

V.  Sims,  13. 
Mills  V.  Argall.  483,  485,  48a 

V.  Osborne.  209. 
Milton  V.  Mosher.  229. 
Miner  v.  Downer,  106.  259. 

V.  Lorman,  290. 
Mlnnit  V.  Whinery.  2.59. 
Minnitt  V.  Lord  Talbot,  24. 
Mitchell  V.  Cockburne,  2(1 

V.  O'Neale.  17. 

V.  Reed,  162. 

V.  Tarbutt,  247,  378. 
Mlttnlght  V.  Smith,  335. 
MoEfat  V.  McKlsslck,  106. 
Moffatt  V.  Farquharson,  125,  KM. 
Moist's  Appeal,  261 


530 


CASES    CITED. 


[The  figures  refer  to  pages.l 


Molen  V.  Orr,  380. 

Moley  V.  Brine,  13,  116. 

Moline  Wagon   Co.   v.   Rummell,  131, 

260. 
Mollwo,    March    &    Co.    v.    Court    of 

Wards,  3,  50,  54,  61. 
Monroe  v.  Conner,  236,  237. 

V.  Ezzell,  364. 

V.  Greenhoe,  56. 

V.  Hamilton,  399. 
Montague  v.  Hayes,  169,  170. 
Montgomery  &  W.  P.  R.  Co.  v.  Moore, 

66. 
Moody  V.  Payne,  147,  150,  152 

V.  Rathburn,  121,  404. 
Moore,  Ex  parte,  294. 

V.  Boyd,  238. 

V.  Burns,  3<)3. 

V.  Curry,  65. 

V.  Davis,  32,  58. 

V.  Gano,  311. 

V.  Harper,  81. 

V.  Huntington,  182. 

V.  Knott.  399. 

V.  Pennell,  145. 

V.  Smith,  (JO. 

V.  Trieber,  140. 

V.  Voughton,  171. 

V.  Wood,  128. 
Moorehead  v.  Gilmore,  226. 
Moran  v.  Le  Blanc,  308. 
Morans  v.  Armstrong,  219. 
More  V.  Dixon,  82. 

V.  Rand,  323. 
Moreau  v.  Saffarans,  112,  126. 
Moreton  v.  Hardern,  243. 
Morey  v.  Grant,  357. 
Morgan  v.  Farrel.  33,  61,  85. 

V.  Stearns,  45. 
Morlson  v.  Moat,  203,  345,  349. 
Moritz  V.  Peebles,  321. 
Morley,  Ex  parte,  181. 

V.  Strombom,  144. 
Morlitzer  v.  Bernard,  232,  241. 
Morrell  v.  Insurance  Co.,  245. 
MoiTill  V.  Spurr,  70. 
Morris  v.  Allen,  170. 

V.  Barrett,  123,  124. 

V.  Colman,  347. 

V.  Kearsley,  345. 

V.  Land  Co.,  501. 

V.  Peckham,  21,  70, 


Morris  v.  Wood,  176. 

Morrison  v.  Blodgett,  141,  142,  287. 

V.  Cole,  44,  60,  61. 

V.  Mendenhall,  112. 
Morris  Run  Coal  Co.  v.  Barclay  Coal 

Co.,  15,  26. 
Morrissey  v.  Weed,  503. 
Morse  v.  Bellows,  OiH,  388. 

V.  Hutchlns,  323. 

V.  Richmond,  57,  58.  215,  235,  240 
Morss  V.  Gleason,  409. 
Moss  V.  McCall,  169. 
Mowbray  v.  Lawrence,  152. 
MoynaJian  v.  Hanaford,  '££1. 
Mozley  v.  Alston.  328. 
Mudd  V.  Bast,  398,  409. 
Mulford  V.  Griffin,  261. 
Mullany  v.  Keenan,  317. 
Mumford  v.  Nicoll,  183,  274. 
Munnings  v.  Bury,  338. 
Munroe  v.  Cooper,  226. 
Munson  v.  Wicliwlre,  220. 
Munster  v.  Cox,  217. 
Murdock  v.  Martin.  317. 
Murphy  v.  Abrams,  12tt. 

V.  Camden,  226. 

V.  Crafts,  175,  177. 

V.  Johnson,  12. 
Murray  v.  Bogert,  150,  300,  303,  316. 

V.  Mumford,  261. 

V.  ^Murray,   142. 

V.  Pinkott,  398. 
Murrill  v.  Neill,  274,  288,  2tfl, 
Musser  v.  Brink,  56.  68. 
My  cock  V.  Beatson,  19. 
Myers  v.  Edge,  103. 

V.  Tyson,  278. 
;\lynderse  v.  Snook,  ."^67. 
Myrick  V.  Dame,  388. 


N 


Xanson  t.  Gordon,  282.  29^ 
Napier  v.  Catron,  230. 
Nason,  Ex  parte,  106,  297. 
Nathanson  v.  Spitz,  374. 
National  Bank  v.  Criu^ian,  229,  231. 

V.  Sprague,  279. 

V.  Thomas,  229,  239,  241. 
National    Bank    of    Chemung    v.    In- 
graham,  70. 


CASES   CITED. 


531 


[The  figures  refer  to  pages.] 


National  Bank  of  Commerce  v.  Mead- 

er,  221,  22S,  240. 
National    Banli    of    Jacksonville    v. 

Mapes,  132. 
National  Bank  of  the   Metropolis   v. 

Sprague,  2TS. 
National    Bank    of    the    Uepublic    v. 

Dickinson.  233. 
National  Excb.  Bank  v.  White,  214. 
National  Security  Bank  v.  McDonald, 

227. 
National  Union  Bank  of  Watertown 

V.  Landon,  72,  73. 
Natusch  V.  Irving,  197,  347. 
Navigation  Co.  v.  Warriner,  397. 
Neal  v.  Berry,  12,  172. 

V.  Keel's  Ex'rs.  333. 
Nebraska  Ky.  Co.  v.  Lett,  249. 
Needham  v.  U'riffht,  397. 
Neil  V.  Childs,  247. 

V.  Greenleaf,  304,  310,  321. 
Neilson  v.  Iron  Co.,  190,  199. 
Xelms  V.  McGraw,  (>4. 
Nelson  v.  Bealby,  190. 
V.  Hayner,  410. 
V.  Hill,  385. 
V.  Wheelock,  218,  229. 
Nerot  V.  Buruaud,  181,  103,  401. 
Nevins  v.  Townsend,  303. 
New  V.  Wright,  340,  347,  355,  357. 
Newberger  v.   Friede,  57,  58. 
Newbigging  v.  Adam,  173. 
Nevs'by  v.  Herrel],  299. 
Newcomet  v.  Brotzman,  261. 
Newell  T.  Cochran.  22. 
v.  Humphrey.  384. 
Newhall  v.  Buckingham,  143,  152,  153. 

335. 
Newman  v.  Bagley,  287,  293. 
V.  Bean,  44. 
V.  Morris,  14. 
Newmarch  v.  Clay,  267. 
Xewry,  etc.,  R.  Co.  v.  :Moss,  399. 
Newsome  v.  Coles,  83,  200,  264. 
New  York  Dry  Dock  Co.  v.  Treadwell, 

374. 
New  York  Firemen's  Ins.  Co.  v.  Ben- 
nett, 227. 
New  York  &  S.  Canal  Co.  t.  Fulton 

Bank,   15. 
Nichol  V.  Stewart,  114. 
Nicholson  v.  Moog,  83. 


Nicoll  T.  Mumford,  142,  150. 
NiehofC  v.  Dudley,  43. 
Niles  V.  Williams,  333,  334, 
Nims  V.  Bigelow,  315. 

V.  Nlms,  116. 
Nirdlinger  v.  Bernheimer,  80. 
Nisbet  V.  Patton,  248. 
Niven  v.  Spickerraan.  299,  502. 
Nixon  V.  Nash.  141,  145,  152,  403. 
Noakes  v.  Barlow,  56. 
Noel  V.  Bowman.  172. 
Nokes,  Ex  parte,  299. 
Nolan  V.  Lovelock,  92,  237. 
Noonan  v.  Orton,  371,  224. 
North  T.  Bloss.  375. 

V.  Mudge.  272. 
Northern  Bank  of  Kentucky  v.  Kei- 

zer,  2S5. 
North    Pennsylvania   Coal    Co.'s   An- 

peal,  223. 
Northrup  v.  McGiU,  139. 

V.  Phillips,  29. 
Norton  v.  Seymour.  106. 
Norway  v.  Rowe,  330,  361. 
Noyes  v.  Railroad  Co..  237. 
Nussabaunier  v.  Becker,  265. 
Nutting  V.  Ashcroft,  113,  285,  485. 

V.  Colt,  61. 


Oakford  v.  Steam  Shipping  Co.,  269. 
O'Brien  v.  Cooke,  347. 

v.  Smith,  299. 
O'Bryan  v.  Gibbons,  357. 
Odiorne  v.  Maxcy.  220. 
Ogden  V.  Arnot.  410. 

V.  Astor,  415. 
Ogilvy,  Ex  parte,  294. 
Oldaker  v.  Lavender,  192,  206. 
Oliphant  v.  Mathews,  457. 
Oliver  v.  Gray.  6. 
Olleman  v.  Reagan's  Adm'r,  172. 
Olm stead  v.  Webster.  247,  272. 
()ls<  'a  V.  :Moriison,  130.  280. 
Omaha  &  Grant  Smelting  &  Refining 

Co.  V.  Ruc-ker,  31.  54. 
O'Neil  V.  Salmon,  287. 
O'Neill  V.  Brown,  303. 
Ontario  Bank  v.  Hennessey,  105.  107, 

228. 


532 


CASES   CITEP. 


[The  figures  refer  to  pages.) 


Ontario  Salt  Co.   v.  Merchants'  Salt 

Co.,  68. 
Oppenheimer  v.  Clemmons,  220. 
Orvis  V.  Curtlss,  44,  63. 
Osboni  V.  McBride,  142,  152. 

V.  Osborn,  381. 
Osborue  v.  Hai-per.  323,  324. 
Osbrey  v.  Reimer,  56,  58. 
Osburn  v.  Farr,  11. 
Osgood  V.  Glover,  220. 
Ostrom  V.  Jacobs.  106,  239. 
Ottoman  Cahvey  Co.  v.  Dan*,  lOT. 
Outcalt  V.  Burnet,  488. 
Owen,  Ex  parte,  121.  SSd. 

V.  Van  Uster,  239. 
Owston  V.  Ogle.  320. 
Ozeas  V.  Johuson,  300. 


Pacific  Mut   LltV   I  U.S.  Co.  r.  Flslier. 

213. 
Page  V.  Brant,  246,  200,  373,  375. 

V.  Carpenter.  143. 

V.  Co.x.  207.  345. 

V.  Morse,  13. 

V.  Tliompsou.  302.  .309. 

V.  Van  kirk.  209.  405. 

V.  Wolcott.  409. 
Pahlman  v.  Graves,  274,  288, 

V.  Taylor,  106.  212.  228. 
Paige  V.  Paige.  126.  128. 
Paine  v.  Thacher,  167,  32a 
Palmer  v.  Bags.  103. 

V.  Purdy,  271. 

V.  Sawyer,  409. 

V.  Stephens,  106,  239. 

T.  Tyler.  68. 
Pape  V.  Cole.  385. 
Parchen  v.  Anderson,  44,  60.  61. 
Pardee  v.  Markle.  267. 
Pare  v.  Clegg,  27. 
Parham  Sewing-Mach.  Co.  v.  Brock. 

103. 
Park  V.  Wooten's  Ex'rs,  265. 
Park  Bro.s.  &  Co.  v.  Harwl,  500. 
Parker,  Ex  parte,  254. 

V.  Canfleld,  43. 

V.  Day,  167. 

V.  Fergus,  43,  44,  60. 

▼.  Plstor,  144,  152. 

T.  Wlnlow,  877. 


Parkhuret  v.  Muir,  355. 

Parkin  v.  Carruthers,  261. 

Parmalee  v.  Wlggenhorn,  254. 

Parmelee  v.  Lawrence,  268. 

Parnell  v.  Robinson,  186. 

Patch   V.    Wheatland,   105,    107,   218. 

229. 
Paterson  v.  Gandasequi,  377. 
Patterson  v.  P.'irton.  321. 

V.  Holland.  4-13,  458,  459. 

V.  Sllliman,  187.  402. 

V.  Ware,  339.  343. 
Patterson's  Appeal,  26. 
Pattison  v.  Blanciiard,  66,  299. 
Patton  v.  Carr,  409. 
Pawsey  v.  Armstrong,  58,  203,  412. 
Payne  v.  Freer,  170.  202,  303. 

V.  Hornby,  163.  181. 

V.  Mattliews,  294. 

V.  Smith.  410. 

V.  Thompson,  16. 
Paynter  v.  Paynter,  6. 
Peacock  v.  Cummings,  159. 

V.  Peacock,  138.  1.39,  347,  355,  860, 
361,  409. 
Peake,  Ex  parte,  130,  288,  289. 
Poarce  v.  Cliamberlain,  153. 

V.  Cooke,  285, 

V.  Ham,  395. 

V.  Pearce,  122. 
Pears  v.  Barnes,  422. 
Pearson  v.  Keedy,  385. 

V.  Skelton.  ?,2r^. 
Pease  v.  Cole,  225. 

V.  Hewitt,  20,  406. 

V.  Hirst,  103. 
Peck  V.  Schultze,  152. 
Peden  v.  Mail,  2.33. 
Peele,  Ex  parte,  2.53,  254. 
Peir.se  v.  Bowles,  220. 
Pelletier  v.  Couture,  13. 
Penn  v.  Kearuy,  218. 

V.  Whiteliead,  12. 
Pennybacker  v.  Leary,  22,  180. 
Penrose  v.  Martyr.  445. 
Penton  v.  Dunn,  207. 
Pentz  V.  Stanton,  376. 
People  V.  Judges  of  Court  of  Common 
Pleas  of  Dutchess  Co.,  222. 

y.  North  River  Sugar-Refining  Co.. 
15. 

V.  White,  410. 


CASES   CITED. 


638 


[The  figures  refer  to  pages.] 


Peoria  Marine  &  Fire  Ins.  Co.  v.  Hall, 

220. 
PercifuU  v.  Piatt,  126. 
Perens  v.  Johnson,  335. 
Perley  v.  Brown,  299. 
Perrine  v.  Hanlvinson,  44. 
Perring  v.  Houe,  225,  303. 
Perry  v.  Hale,  323 

V.  Smith.  61. 
Person  v.  Wilson,  115,  134. 
Personette  v.  Pryme.  22. 
Perth  Amboy  Manuf'g  Co.  v.  Condlt, 

472,  489. 
Peter  v.  Rich,  173. 
Peterson  v.  Railway  Co.,  65. 

V.  Roach,  227. 
Petit  V.  Cheveller,  347. 
Petrie  v.  Steedly,  416. 
PettingiU  V.  Jones,  305,  307. 
Pettis  V.  Atliins,  373. 
Pettyt  V.  Janeson,  192,  194,  20fl. 
Pfeuffer  v.  Maltliy.  28. 
Pflrmann  v.  Henlcel,  423. 
Phelps  V.  McNeely,  279. 
Philips  V.  Atliiuson,  348.  355,  357.  3.58. 

V.  Samuel.  44. 
Phillips  V.  Blatchford,  172,  800,  303, 
838,  499.  503. 

V.  Clagett.  224. 

V.  Cool<.  145.  152. 

V.  Furniture  Co..  51. 

V.  Phillips,  10. 

V.  Trezevant,  358. 

V.  Ward,  272. 
Phllpott  V.  Beclitel,  366. 
Plioenix  Ins.  Co.  v.  Moog,  385. 
Piatt  V.  Oliver,  28. 
Pierce  v.  Bryant,  422,  443,  444. 

V.  .Taelvson,  147. 

V.  Kearney,  272. 

V.  McClellan,  137,  163. 

V.   Scott,  178.   179. 

V.  Shippee,  58. 

V.  Thompson,  323. 
Pierson  v.  Hooker,  224. 
Pigott  V.  Bagley.  207. 
Pike  V.  Bacon,  223.  238. 
Pillans  V.  Harkness,  173. 
Pilling  V.  Pilling,  132,  189,  198. 
Pinkerton,  Ex  parte,  289. 
Pinkett  v.  Wright,  398. 


Pinkney  v.  Hall.  225. 

Pio  Pico  V.  Cuyas.  21,  303. 

Plrtle  V.  Penn,  327.  346.  347. 

Pitcher  v.  Barrows,  263,  303. 

Pitkin  V.  Pitkin,  43. 

Pittsburgh  Melting  Co.  v.  Reese,  600. 

Place  V.  Sweetzer,  152, 

Planters'  Bank  v.  Union  Bank,  29. 

Planters'  &  Miners'  Bank  r.  Padgett, 

72. 
Piatt  V.  Halen,  364. 

V.  Koehler,  226. 
Pleasants  v.  Fant,  60. 
Plumer  v.  Gregory.  24ab 

V.  Lord,  15. 
Plummer,  In  re,  292. 

V.  Trost,  66. 
Poillon  V.  Secor,  86. 
Polk  V.  Buchanan,  45. 

V.  Gallant,  142. 

V.  Oliver,  82,  260.  26i, 
Pollard  V.  Stanton,  63. 
Pomeroy  v.  Benton,  178. 

V.  Sigerson,  66. 
Pond  v.  Clark,  828. 

V.  Cummins.  61. 
Pool  V.  Perdue,  305,  307. 
Poole  v.  Fisher,  80. 

V.  Gist,  243. 
Pooley  V.  Driver.  8,  32,  33,  48,  40,  54, 
58.  60.  61.  96,  104,  212. 

V.  Seney.  181. 

V.  Whitmore,  226. 
Pope  V.  Ha  man,  145. 

V.  Rlsley,  260. 
Ponlage  v.  Cole,  200. 
Porter  v.  Curry,  231. 

V.  Curtis.  53. 
Post  V.  Klmberly.  3Z 
Pott  V.  Eyton,  86,  85. 
Potter  V.  Greene,  82. 
Powdrell  v.  .Tones,  204. 
Powell  V.  Maguire,  69. 

V.  Waters,  226.  234. 
Pratt  V.  McHatton,  169. 
Prendergast  v.  Turton,  330,  331. 
Prentice  v.  Elliott,  170. 
Prentiss  v.  Sinclair,  260,  264. 
President,  etc.,  of  Commercial  BaPk 

v.  Wilkins,  148,  149. 
President,  etc.,  of  Mechanics'  Bank  v. 
Hildreth,  400. 


534 


CASES   CITED. 


[The  figures  refer  to  pages.] 


President,   etc.,   of   Rensselaer   Glass 

Factory  v.  Reid,  1G9. 
Preston  v.  Colby.  274,  292. 

V.  Strutton.  317.  318. 
Prevost  V.  Gratz,  125. 
Price  V.  Alexander,  44,  223,  238. 

V.  Cavins.  294. 

V.  Hunt.  142. 

V.  Spencer.  313. 
Priest  V.  Chouteau,  63. 
Princeton  &  Kingston  T.  Co.  T.  Gu- 

llck,  262. 
Prize  Cases,  28. 
Prole  T.  Masterruan,  338. 
Prouty  V.  Swift,  44,  60. 
Pullen  V.  Whitfield,  .385. 
Pulliam  V.  Schimpf,  64. 
Purdy  V.  Lacock.  462. 

V.  Powers,  .390. 
Purvlance  v.  McClintee,  46. 

V.  Sutherland,  238. 
Purvlnes  v.  Champion.  o07,  315,  316. 
Puschel  V.  Hoover.  .373. 
Pusey  V.  Dusenbury,  494. 
Putnam  v.  Wise.  64. 


Q 


Quackenbush  v.  Sawyer.  R.  43,  64,  67. 

(Jueen  v.  Mallin.son,  .323. 

Queen  City  Furniture  &  Carpet  Co.  v. 

Crawford.  69. 
Qulncy  Railroad  Bridge  Co.  t.  Adams 

Co.,  79.  SO. 
Qulnllvan  v.  English,  354. 
Qulnn  V.  Fuller.  2.34. 


R 


Rabe  v.  Wells.  263. 

Racine  &  M.  R.  Co.  v.  Farmers'  Loan 

&  Trust  Co..  16. 
Radenhurst  v.  Bates.  321. 
Railroad  Co.  v.  Durant.  125. 
Rainey  v.  Nance,  142,  1.52. 
Rammelsberg  v.  Mitchell,  128. 
Rand  v.  Wright.  397. 
Randall  v,  Johnson,  143,  145. 
V.  Morrell,  356. 


Randle  v.  State,  43. 
Rankin  v.  Fairley,  57. 
Ransom  v.  Lovless,  263. 
Rapp  V.  Latham,  219. 
Ratzer  v.  Ratzer.  10,  139. 
Rau,  Appeal  of,  243. 
Raub  V.  Smith,  22. 
Rawitzer  v.  Wyatt,  441. 
Rawlins  v.  Wickham,  173. 
Rawlinson  v.  Clarke,  50,  61. 
Rawson,  Ex  parte,  281. 

V.  Taylor,  271. 
Ray  V.  Davies.  386. 
Raymond  v.  Putnam,  16,  115,  118. 

v.  Vaughan.  14.  404. 
Raynard  v.  Chase.  27. 
Rayne  v.  Terrell,  470. 
Read  v.  Bailey.  290. 

V.  Baylie.'s.  279. 

V.  Bowers.  348.  352. 

V.  Nevitt.  321. 

V.  Smith.  27.  29. 
Real  Estate  Inv.  Co.  v.  Smith,  229. 
Reboul  V.  Chalker,  68. 
Receivers  of  Mechanics'  Bank  v.  God 

win,  399. 
Redmayne  v.  Forster,  155,  156. 
Reed  v.  Gould.  391. 

V.  Kremer.  31. 

V.  Murphy.  44. 

V.  Railroad  Co.,  112,  363. 

V.  Shei»ardson.  143. 

V.  White,  270. 
Reese  v.  Bradford.  335. 
Reeve,  Ex  parte,  281,  284.  296. 
Reg.   V.   Robson.  24. 
Regester  v.  Dodge,  262,  270,  SSL 
Rehfuss  V.  Moore,  444. 
Reid.  Ex  parte,  284. 

V.  Hollinshead,  7. 
Rellly  V.  Reilly.  335. 

V.  Walsh,  161. 
Relnlieimer  v.  Hemingway,  134,  140. 
Reiter  v.  Morton,  319. 
Reitzel  v.  Haines,  454,  455. 
Remington  v.  Allen,  299.  303. 

V.  Cummings,  217. 
Renton  v.  Chaplain,  354,  357,  403. 
Rex  V.  Manning.  145. 

V.  Sanderson,  292. 
Reynell  v.  Lewis,  71. 


CASES  CITBD. 


535 


[The  figures  refer  to  pages.] 


Reynolds  y.  Austin,  14. 

V.  Cleveland,  240. 

V.  Heirs,  etc.,  169. 

V.  Hicks,  79. 

V.  Pool,  G2,  64. 
Rhodes  v.  Moules.  248. 
Rice  V.  Barnard,  89, 

V.  Culver,  323. 

V.  Doane,  228. 

V.  Jackson,  213,  231. 
Richards  v.  Baurman,  360,  895. 

V.  Davies,  340. 

V.  Fisher,  224. 

V.  Grinnell.  21.  22,  59,  60,  63,  116. 

V.  Haines,  143. 

V.  Heather,  384. 

V.  Leveille.  131,  273,  274. 

V.  Manson,  125. 

V.  Maynard,  274,  411. 

V.  Todd,  19.  328. 
Richardson  v.  Bank  of  England,  100, 
301.  303. 

V.  Gregory.  394. 

V.  Hastings.  342. 

V.  Hops;.  442.  443. 

T.  Huggins.  107. 

V.  Hughitt.  44.  61. 

V.  Lester,  229. 
Richmond  v.  Heapy.  387. 

V.  Judy,  24. 

V.  Voorhees,  121. 
Rlchter  v.  Poppenhansen,  489,  498. 
Ricketts  v.  Bennett.  21."),  229. 
Rickey  v.  Bowne,  3.34. 
Riddle  v.  Etting.  409. 

V.  Whitehill.  126.  128.  896,  399,  400. 
Ridenour  v.  Mayo.  73. 
RldgTvay  v.  Grant.  321. 
Riedenburg  v.  Schmltt,  80. 
Rieser,  In  re.  281. 
Rigden  v.  Pierce.  206. 
Rimel  v.  Hayes.  S3. 
Rlngo  v.  Wing.  3S0. 
Riper  v.  Poppenhansen,  421.  423. 
Rlshton  T.  Grissell.  185,  33.5. 
Kittenhouse  v.  Leigh.  82. 
Rltter  V.  Galitzenstein,  204. 
Roach  V.  Perry,  139. 
Robbins  v.  Fuller,  219.  409. 

V.  Laswell,  GO,  62. 
Robbins  Electric  Co.  v.  Weber,  BOL 


Roberts  v.   Eberhardt,  352,  854,  858. 
405. 

V.  Kelsey,  258. 

y.  McKee.  346,  349. 

V.  McCarty.  115. 

V.  Ripley,  321. 

v.   Spencer,  263. 
Robertson  v.  Baker,  188. 

y,  Corsett,  100. 

y.  Miller,  195. 

V.  Smith,  247. 

V.  Southgate,  175,  176. 
Robinson  v.  Anderson,  79,  138.  140. 

y.  Ashton.  121. 

V.  Davison.  204. 

y.  Green's  Adm'r,  3,  300,  308,  818. 

y.  Mcintosh,  77,  442,  452,  458,  460. 
483,  494. 

V.  Magarity,  109,  112 

y.   Mansfield,  871. 

y.  Marchant.  372. 

y.  Preston,  5. 

y.  Tevls.   149. 

y.  Thompson,  159. 

V.  Wilkinson,  96,  269. 
Robinson  Bank  v.  Miller.  120,  122,  128 

278. 
Robinson's  Ex'rs'  Case,  172. 
Robley  y.  Brooke,  124,  140. 
Robson  V.  Curtis.  307. 

y.  Drummond.  368.  383. 
Rockwell  V.  Wilder.  306.  317. 
Rodes  V.  Rodes,  172. 
Rodgers  v.  Maw,  271. 

V.  Meranda.  281.  282.  285. 
Rogers  v.  Batchelor,  390. 

V.  Betterton,  266. 

y.  Gage,  230. 

y.    Nichols.   403. 

y.  Rogers,  311,  312. 
Roger  Williams   Nat,   Bank   y.   Hall, 

297. 
Rolfe  v.  Flower,  263. 
Rooke  v.   Nlsbet.  20. 
Roope  v.  D'Avigdor,  336,  337. 
Rose  v.  Buscher,  67 

V.  Roberts,  320. 
Rosenberg  v.  Block,  428,  452,  460. 
Rosenfleld  v.  Haight,  32,  54. 
Rosensteln  y.  Burns,  405,  40ft. 
Rosenstiel  y.  Gray,  154. 


536 


CASES   CITED. 


[The  figures  refer  to  pages.] 


Rosenweig  v.  Thompson,  335. 
Ross  V.  Cornell,  316. 

V.  Henderson.  142. 

V.  Parkyns,  50,  54,  61. 
Rothchild  v.  Hoge,  443,  449. 
Rothwell  V.  Humphreys,  228. 
Routh  V.  Webster,  35U. 
Rovelsky  v.  Brown,  128. 
Rowe  V.  Wood,  157.  178,  358.  36a 
Rowland  v.  Long,  44. 

V.  Miller,  416. 
Rowlands  v.  Evans,  404. 
Rowlandson,  Ex  parte,  36,  130. 
Royal  Canadian  I'.ank  v.  Wilson,  106. 
Ruckman  v.  Docker,  60. 
Ruddlck  V.  Otis,  61. 
Ruffin,   Ex  parte,   130,  180 
Ruffner  v.  Hewitt,  409. 

V.  McConnel,  238. 
Rule  V.  Jewell,  331. 
Russ  V.  Fay,  143. 
Russell  V.  Annuble,  213,  215,  225. 

V.  Austwick.  165. 

V.  Byron,  303. 

V.  Grimes,  321. 

V.  Leland,  403. 

V.  Minnesota  Outfit,  309. 

V.  Russell.  209,  402. 
Russia  Cement  Co.  v.  Le  Page.  108. 
Rutland    Marble   Co.    v.    Ripley,    346, 

347. 
Ryall  V.  Rowles.  1S3. 
Ryder  v.  Gilbert,  139.  147. 

y.  Wilcox,  60,  299,  305,  317. 


Sadler,  Ex  parte,  288. 

V.  Leigh,  370. 

V.  Nixon.  299.  303. 
Sage  V.  Chollar.  277. 

V.  Ensign,  220. 

V.  Sherman.  107,  212. 
Sagers  v.  Nuckolls,  244. 
Sailors  V.  Printing  Co..  32.  83,  68. 
St.  Barbe,  Ex  parte,  2S3.  291. 
Salmon  v.  Davis,  219,  387,  388. 
Saltoun  V.  Houstoun,  208. 
Sampson  v.  Shaw,  29. 
Sanborn  v.  Royce,  134,  148 
Sandera  t.  Young,  143,  403. 


Sanderson  v.  Stockdale,  279,  335. 
Sandusky,  In  re,  292. 
Sanford  r.  Mickles,  226. 
Sangston  v.  Hack,  116.  194,  195. 
Sankey  v.  Columbus  Irou  Works,  31, 

51,  59. 
Sargent  v.  Downey,  6,  64. 
Sarmiento  v.  The  Catherine,  495. 
Satterthwait  v.  Marshall,  77. 
Sauls,  In  re,  222. 
Saunders  v.  Reilly,  277. 
Savage  v.  Carter,  172,  183. 

V.  Putnam,  271,  501. 
Sawyer  v.  Bank,  62. 
Sayer  v.  Bennet,  404. 
Saylor  v.  Mockbie,  3.54.  359. 
Scarf  V.  Jardine,  81.  272.  376. 
Scarlett  v.  Snodgrass,  15. 
Schaeffer  v.  Fithian,  279. 
Schalck  v.  Harmon.  410. 
Scheiffelin  v.  Stevens,  260. 
Scliellenbeck  v.  Studebaker,  225. 
Schenkl  v.  Dana.  167,  411. 
Scheuer  v.  Berringer,  183. 
Scliiele  v.  Hoaly,  277. 
Sclilater  v.  Winpenny,  259. 
Schmaltz  v.  Avery,  368. 
Schinidi.npp  v.  Currio.  279. 
Schmidt  V.  Glade.  320. 
Scholefleld  v.   Eichplber.LTor,  258,  897. 
Schorten  v.  Davis.  261. 
Schulten  v.  Lord.  496,  497. 
Scott  V.  Beale.  267. 

V.  Campbell.  56,  320. 

V.  Caruth,  299.  315. 

V.  Colmesnil,  265,  272, 

V.  Conway,  375. 

T.  Godwin,  366. 

V.  McKinney,  124. 

V,  Miller,  27. 

V.  Milne,  329. 

V.  Rayment,  76. 
Scott's  Appeal,  271,  296. 
Scruggs  V.  Blair,  128. 
Scrugham  v.  Carter.  143,  148,  150,  152. 
Seabury  v.  Bolles,  87. 
Senmaji  v.  Aschermann.  214,  218,  231, 

235. 
Second  Nat.  Bank  of  Cincinnati  v.  Hall, 

72.  73. 
Second   Nat.   Bank   of   Red   Bank   v. 
Farr,  131. 


CASES   CITED. 


637 


[The  figures  refer  to  pages.] 


Secor  V.  Keller,  364. 
Sedgwick's  Case,  175. 
Sedgworth  v.  Overend,  371. 
Seely  v.  Schenck,  363. 
Seely's  Adm'r  v.  Beck,  28. 
Selbert  v.  Bakewell,  443,  47X 
Selleck  v.  French,  171. 
Senhouse  v.  Christian,  330.  331. 
Serviss  v.  McDonnell,  255,  256. 
Settembre  v.  Putnam,  503. 
Settle  V.  Dry-Goods  Co.,  230. 
Setzer  v.  Beale,  80,  154. 
Sexton  V.  Lamb,  113,  114. 
Seymour  v.  Buller.  268. 

V.  Railroad  Co..  364. 
Shafer  v.  Randolph,  80. 
Shaln  V.  Du  Jardln.  107. 
Shamburg  v.  Abbott.  271. 

V.  Ruggles,  200.  265. 
Shanks  v.  Klein.  126-128,  136.  233. 
Shannon  v.  Wright,  340,  3r.G.  358. 
Sharp  V.  Hibbins,  332.  33ti. 

V.  Hutchinson,  460. 

V.  Mllllgan.  218. 
Sharpe  v.  Cummlngs,  5,  139. 

V.  Johnston.  132. 
Shattuck  V.  Lawson.  306. 
Shaw  V.  Gait.  49. 

V.  McGregory,  381, 

V.  Pratt,  268. 
Shea  V.  Donahue,  115,  116. 
Shearer  v.  Paine,  o3~^. 

V.  Shearer,  127.  128. 
Sheble  v.  Strong,  460,  495. 
Sheen,  Ex  parte,  296. 
Sheffield  Gas  Consumers'  Co.  t.  Har- 
rison, 76. 
Shelton  v.  Cocke.  261. 
Shennefleld  v.  Dutton,  32a 
Shepard  r.  Pratt.  44,  61. 

V.  Richards,  306. 
Sheppard  v.  Bopgs,  412. 

V.  Oxenford,  342,  343,  354,  359,  860. 
Sheridan  v.  Medara,  59. 
Sherman  v.  Christy.  225,  272. 

V.  Kreul,  385.  386. 

V.  Sherman,  328. 
Sherrod  v.  Langdon,  80. 
Sherwood  v.  His  Creditors,  48tt. 

V.  Railway  Co.,  22. 

V.  Snow,  226.  228. 
Shields  V.  Fuller.  410. 


Shlmer  v.  Huber,  279. 
Shirk  V.  Shultz,  12,  13. 
Shirreff  v.  Wilks,  149. 
Shoemaker  v.  Benedict,  261. 
Shoemaker  Piano  Manuf'g  Co.  v.  Bei- 

nard,  254, 
Shott  V.  Strealfleld,  375. 
Shulte  V.  Hoffman,  3G0. 
Shurlds  V.  Tilson,  264. 
Sichel  V.  Moseuthal.  76,  77. 
Siegel  V.  Chldsey,  239,  279. 

V.  Wood,  444. 
Sleghortner  v,  Weissenbom,  803,  855, 

405. 
Slgler  V.  Bank,  279. 

V.  Piatt,  261. 
Slgourney  v.  Munn,  125. 
Sikes  V.  Work.  306.  307. 
SlUltoe,  Ex  parte,  2S1-2S3,  291. 
Silver  V.  Barnes,  24. 
Silverman  v.  Chase,  224. 
Silveus'  Ex'rs  v.  Porter,  14. 
Slmmonds  v.  Swaine,  209. 
Simmons  v.  Leonard,  190,  194, 
Slmonds  v.  Speed,  373. 

v.  Strong,  264. 
Slmonton  v.  Sibley.  233. 
Simrall  v.  O'Bannons.  30a 
Sims  V.  Bond,  369,  370. 

V,  McEwen's  Adm'r,  77. 

V.  Smith.  404. 
Slmson  V.  Cooke,  103. 

V.  Ingham,  268. 
Slndelare  v.  Walker,  134,  137. 
Singer  v.  Heller,  406. 

V.  Kelly,  421,  471.  472,  486, 
Slnkler  v.  Lambert,  232. 
Sinsheimer  v.  Manufacturing  Co.,  873 
Slrrlne  v.  Brlggs,  143. 
Slstare  v.  Gushing.  403, 
Skillman  v,  Lachman,  503. 
Skinner  v.  Dayton,  223,  394.  500. 

V.    Tinker,   396. 
Sklpp  V.  Harwood,  142,  180,  181,  408. 
Slade  V.  Paschal,  83. 
Slater,  Ex  parte,  224,  246.  268. 
Slemmer's  Appeal,  354,  355.  394. 
Sloan  V.  Machine  Co.,  223. 

V.  Moore,  234,  352,  858,  86a 
Slocum,  In  re,  289. 
Sloo  V.  Bank,  217. 
Smertz  v.  Shreeve,  228, 


538 


CASES  CITED. 


[The  figures  refer  to  pages.] 


Smith.  Ex  parte,  121,  283,  290,  2»4. 

V.  Argall,  444. 

V.  Bailey,  15. 

V.  Black,  247,  272. 

V.  Bodine,  61. 

V.  Burnbam.  22. 

V,  C  baud  OS.  190, 

V.  Cis.son,  21 S. 

V.  Collins.  22(1,  228, 

T.  Cooke,  3T:i. 

V.  Craven,  251. 

V.  De  Silva,  183. 

V.  Everett,  18,  414. 

V.  Fromont.  350. 

r.  Hill,  82,  83. 

T.   Je.ve.s,    190.   327.  348,  349,   354, 
355.  358,  359.  405. 

V.  Kemp,  319. 

V.  Kerr,  223. 

V.  Knight,  44.  166,  170. 

V.  Lowe,  r;5s. 

V.  Luslier.  .^03. 

V.  Mules,  203. 

V.  Orser,  143. 

V.  Parkes,  1.56. 

V.  Plummer,  184. 

y.  Railroad  Co.,  65. 

V.   Ramsey.  1.32. 

V,  Shelden.  271. 

V.  Sheldon.  .380. 

V.  Sloan,  225.  229. 

T.   Smith,   120.   124,   125,    170,   176, 
18(5.  300.  303. 

V.  Smytli.  2.31. 

T.   Spencer.   288. 

V.  Stokes.  145. 

V.  Stone,  222,  224. 

T.  Summerlin.  64. 

V.  Tarlton.  21.  22. 

V.  Vanderbnrg.  43,  44. 

V.  Watson,  36. 

V.  Wigley,  267. 

V.  Wright.  .57. 

V.  Zumbro,  172, 
Smith's  Case,  151. 
Smyth  V.  Strader,  227,  303. 
Snell  V.  De  Land,  56. 

V.  Dwlgbt,  28,  29. 
Snodgrass  v.  Reynolds,  68. 
Snow  v.  Howard,  225. 
Snyder  v.  Raber,  316. 

V.  Leland,  482. 


Snyder  v.  Lindsey,  503L 

T.  May,  223. 

V.  Seaman,  198. 
Snyder  Maniifg  Co.  v.   Snyder,  412. 
Society   for   Illustration   of   Practical 

Knowledge  v.  Abbott,  339. 
Sodiker  v.  Applegate,  61. 
Sohns  V.  Sloteman.  50. 
Solomon  v.  Fitzgerald,  126. 

V.  Hollander,  263. 

V.  Kirkwood,  2(>4,  394,  395, 
Solomons  v.  Medex,  372. 
Somerby  v.  Buntin,  57.  76,  77. 
Somerset  Potters  Works  v.  Minot.  283, 

288. 
Somerville  v.  MacKay,  205. 
Somes  V.  Currle.  193. 
Soper  V.  Fry.  217. 
Southern  v.  Grim,  261. 
Soutliwick  V.  McfJovern,  261. 
Spalding  V.  Black.  497. 
Fpark  v.  ITeslop,  176. 
Sparman  v,  Kelm.  13. 
Sparrow  v.  Chisnian.  234,  387. 

V.  Kohn,  109. 
Spaulding  v.  Stubblngs.  57,  62. 
Spear  v.  Newell,  322.  334. 
Spears  v.  Toland,  262. 
Speldel  V.  Henrici,  125. 
Hpeichts  v.  Peters.  ',V,\. 
Spence  v.  Wldtaker,  501. 
Spenceley  v.  Greenwood.  250. 
Spieker  v.  Lash.  281. 
Spiess  V.  Rosswog.  163. 
Spottlswoode's  Case.  172. 
Spragne.  Ex  parte,  132. 
Springer  v.  Cabell,  300. 
Sprout  V.  Crowley.  58.  317,  32a 
Squier  V.  Squler,  217. 
St.nats  V.  Bristow.  137,  149. 
St.natts  V.  Howlptt,  413. 
Stables  v.  Elly.  85. 
Staflford  v.  Fargo,  114. 

V.  Sibley.  51. 
Stafford  Nat.  Bank  v.  Palmer.  72,  78. 
Stall  V.  Bank.  226. 

V.  Cassady.  260,  261. 
Standish  v.  Babcock,  278. 
Stanhope  v.  Swafford,  243. 
Stanton  v.  Westover,  130,  131,  280. 
Staples  V.  Spr.Tgue,  60. 
Stark  T.  Corey,  213,  229. 


CASES   CITED 


639 


[The  figures  refer  to  pages.1 


Starr  t.  Case,  205. 
State  V.  Browor,  334. 

V.  How,  72. 

V.  Quick,  399. 
State  Bank  of  Lushton  v.  O.  S.  Kel- 

ley  Co.,  8. 
State  Bank  of  Virginia  v.  Blanchard, 

483. 
Stavers  v.  Curling,  201. 
Stecker  v.  Smith.  231. 
Steele  v.  Bank,  219,  237.  274,  278. 
Stegman  v.  Berryhill,  172. 
Stein  V.  La  Dow,  218. 

V.  Robertson,  12. 
Stephens  v.  Orman,  195, 

V.  Reynolds.  85. 
Stermlale  v.  Hankinson,  2G7. 
Sterry  v.  Clifton,  27. 
Steuart  v.  Gladstone,  209,  402. 
Stevens  v.  Benning,  104,  383. 

V.  Faucet.  5G,  58,  GU,  62. 

V.  McKibbin,  5. 

v.  Perry,  293. 

V.  Railroad  Co.,  185. 

V.  Railway  Co..  159. 

V.  Stevens,  143. 
Stevenson  v.  Mathers,  08. 
Steward  v.  Blakoway.  123,  124,  127. 
Stewart  v.  Forbes,  13S,  140. 

v.  Gibson,  25. 

V.  Sonneborn,  260. 
Stillman  v.  Harvey,  218. 
Stlmson  V.  Whitney,  213,  261. 
Stirling  v.  Heintzman,  392. 
StoallinLTs  v.  Baker.  7. 
Stockdale  v.  Keyes.  234. 

V.  Ullery,  34G,  347.  3.o6L 
Stockeu  V.  Dawson,  isi. 
Stocker  v.  Brockelbnnk.  62. 

V.  Wedderburn,  7G.  77. 
Stockman  v.  Micholl.  .">1. 
Stockwell  V.  U.  S..  243. 
Stokes  V.  Burney,  244. 

V.  Hodges.  169. 

V.  Lewis,  174. 
Stone  V.  De  Puya.  4 GO. 

V.  Fouse.  300.  321. 

V.  Mattingly,  303. 

V.  Wendover,  321. 
Stonehouse  v.  De  Sllva,  386. 
Stothert  v.  Knox.  300. 
Stout  V.  Seabrook's  Ex'rs,  328. 


Stovall  v.  Clay,  338. 
Strader  v.  V\hite,  44. 
Straiton  v.  Railroad  Co.,  QQw 
Strange  v.  Graham,  137. 

V.  Lee,  103. 
Straus  V.  Kerugood,  288w 
Street  v.  Rijjby,  209. 
Stroher  v.  Elting,  62. 
Strong  v.  Clawson,  335. 
Stroud  V.  Gwyer,  415. 
Slruthers  v.  I'earce,  162. 
Stuart  V.  Kerr.  333. 

V.  Lord  Bute,  178. 
Stubbs  V.  Saigon.  103. 
Stumph  V.  Bauer,  143.  146. 
Stupart  V.  Arrowsmith,  159. 
Si  urges  V.   Swift.  317. 
Sturt  V.  Melllsh,  328. 
Stutts  V.  Chafee.  246. 
Suau  V.  CaCfe,  15. 
Sulley  V.  Attorney  General,  185. 
Summerlot  v.  Hamilton,  214. 
Sun  Ins.  Co.  v.  Kouutz  Line,  80. 
Sutcliffe  V.  Dohrman,  l.">2. 
Sutro  V.  Wagner,  359,  405. 
Sutton  V.  Clarke,  378. 

V.  Dillaye.  410. 
Swan  V.  Stedman,  223. 

V.  Steele,  225,  239. 
Sweeney  v.  Neely,  169,  219. 
Sweet  V.  Bradley,  233. 

V.  Morri-son.  324. 
Swcptzer  v.  .Mead,  223,  2.38. 
Syers  v.  Syers,  70,  76. 
Sykes  v.  Beadon,  25,  27. 
Sylvester  v.  Henrich,  132,  277. 


Tabb  V.  Gist.  154.  261. 
Taft  V.  Buffuni.  403. 

V.  Church,  220. 

V.  Schwamb.  116,  121,  139. 

V.  Ward,  501,  502. 
Taggart  v.  Railroad  Co.,  298. 
Talbot  V.  Scrlpps,  391. 
Talcott  V.  Dudley,  404,  410. 
Tanco  v.  Booth,  244. 
Tannenbaum  v.  Armeny,  337.  339. 
Tanner's  Case,  71. 
Tapley  v.  Butterfleld,  233,  238. 


540 


CASES  CITED. 


[The  flgTires  refer  to  pages.] 


Tappan  r.  Bailey,  500.  501. 

V.  Blalsdell.  147.  151,  287. 
Tasker  v.  Brown,  443. 

V,  Shepherd,  104. 
Tassey  v.  Church,  313. 
Tatam  v.  Williams,  153. 
Tate  V.  Tate,  335. 
Tattersall  v.  Groote.  20. 
Taunton  v.  Insurance  Co.,  217. 
Tayloe  v.  Bush,  66. 
Taylor,  Ex  parte,  12,  289,  294. 

V.  Castle.  155,  503. 

V,  Chureli.  371. 

V.  Cofflng.  115.  116. 

V.  Davis,  178.  348. 

V.  Dean.  338. 

V.  Earle.  445. 

V.  Farmer,  181. 

V.  Fields.  140.  l.'.O. 

T.  Griswold.  477-478. 

V.  Hare.  19. 

V.  Henderson,  31. 

V.  Kynior.  208. 

V.  Railroad  Co..  .372. 

T.  Kaseii,  427.  472. 

V.  Rundell.  178. 

V.  Taylor.  137. 

V.  Ternie,  44. 

V.  Webster.  214.  428. 
Teed  v.  Elworthy,  364.  866. 
Temple  v.  Seaver,  303. 
Tennant,  Ex  parte,  50,  54.  55,  61. 
Tenuey  v.  Foote,  20. 

V.  Protective  Union,  499,  503. 
Terrell,  Ex  parte.  284. 

V.  Goddard.  3.'>.^. 
Terrlll  v.   Rlcliards.  33. 
Terry,  In  re,  470.  4S8. 

V.  Carter.  321. 
Teschmacher  v.  Lenz.  836. 
Thayer,  In  re.  443,  444. 

V.  Augustine.  44. 

V.  Buffuni.  303. 

V.  Goss,  84. 

V.  Humphrey,   ISO,  252,  275,  280, 
383. 
Theus  V.  Dugger,  15. 
Thlllman  v.  Benton,  51. 
Thomas,  In  re,  297. 

V.  Atherton,  172,  178w 

V.  Clarke,  219. 

T.  Edwards,  24. 


Thomas  v.   Harding,  2161 

V.  Hurst,  336. 

V.  Lines.  113.  189. 

V.  Mi  not,  288. 

V.  Fennrich,  390,  89L 

V.  Stetson,  391. 
Thomas  Adams  &  Co.  v.  .Vlbert,  88. 
Thomason  v.  Frere.  386. 
Thompson.  Ex  parte,  283. 

V.  Bank.  33,  83,  85,  86. 

V.  Beck.  415. 

V.  Bowman,  25,  135,  238. 

V.  Brown,  2r,0. 

T.  Emmert.  272, 

V.  Frist,  152. 

V.  Gray,  108. 

V.  Noble.  100.  109,  335,  409. 

V.  Percival.  270. 

T.  Ryan,  125. 

V.  Snow.  44. 

V.  Spittle.  134. 
Thomson  v.  Davenport,  370,  878. 
Thornton  v.  Haw,  27. 

V.  Proctor.  329. 
Tliorp  V.  Holds wortli,  333. 
Tlirall  V.  Seward.  193. 
Tliropp  V.  Rlcliardson,  820. 
Tlnirsby  v.  Lldgerwood,  124,  185,  261, 

409. 
Tliurston  v.  Horton,  8. 

V.  Perkins,  202. 
Thwlng  V.  (^lifTord,  66. 
Tirld  V.  Rims.  112,  127. 
Tllford  V.  Ramsey.  lOd. 
Tilge  V.  Brooks.  451. 
Tilman  v.  Cannon.  77. 
TIndal  V.  Park.  454. 
Tipping  V.  Robbins,  7. 
Titcomb  V.  .lames,  243. 
Titus  V.  President,  etc.,  438. 

V.  Todd's  Adm'r,  L'.m 
Tobey  v.  McFarlin,  144. 
Tobias  V.  Blin.  45. 
Todd.  In  re.  294. 

V.  Emly.  24. 

V.  Rafforty'8  Adm'ra,  3381 
Tom  V.  Goodrich.  223. 
Tomes,  In  re,  279. 
Tomlin  v.  Lawrence,  219. 
Tomllnson  v.  Bricklayers'  Union,  891. 
V.  Nelson,  304. 
V.  Ward,  172,  355. 


CASES   CITED. 


641 


[The  figures  refer  to  pagea] 


TopliCf  V.  Vail,  183. 
Topping.  Ex  parte.  298. 

V.  Paddock,  114. 
Torrey  v.  Baxter,  409. 

V.  Twombly.  303. 
Toulmin,  Ex  parte.  179. 

V.   Copland.  179.   200. 
Tournade  v.  Hagedurn,  18,  460. 
Towle  V.  Meserve,  303. 
Townend  v.  Townend,  415. 
Townes  v.  Blrcbett.  3S5. 
Townsend  v.  Ash.  337. 

V.  Goodfellow.   112. 

V.  Hagar.  244. 
Tracy  v.  Tuflly.  440. 

V.  Walker.  279. 
Tradesmen's  Bank  v.  Aster.  213. 
Trafton  v.  U.  S..  272. 
Traphagen  v.  Burt.  121,  327,  339. 
Treadwell  v.  Brown,  143. 

V.  Manufacturng  Co.,  445. 
Tredwell  v.  Bascoe.  142. 
Tregertben  v.  Lohruin.  84. 
Trego  V.  Hunt.  204. 
Trentman  v.  Swartzoll,  277. 
Tripp  V.  Bank.  4S0. 
Trott  V.  Irish,  371. 
Troughton  v.  Hunter.  411. 
Trowbridge  v.  Cros.s.  137. 

V.  Cushman,  147. 

V.  Soiidder.  72.  73. 
Troy  Iron  &  Nail  Factory  v.  Winslow, 

385. 
Tru.stees  of  Catsklll  Bank  v.  Hooper, 

285. 
Trustees    of    School    Diet.    No.    3    v. 

Gibbs,  482. 
Tucker  v.  Cole.  234. 

V.  Oxley.  275. 
Tuckerman  v.  Nowhall.  246. 
Tudor  V.  White,  200. 
Turbevllle  v.  Ryan.  223. 
Turnbow  v.  Broacli,  239. 
Turner.  Ex  parte,  290,  294. 

V.  Bl.ssell.  63. 

V.  Jaycox,  277. 

V.  Major,  344.  345,  347,  361,  413. 

V.  Reynall,  27. 

V.  Smith,  152. 
Turney  v.  Bayley.  179. 
Turnlpseed  t.  Goodwin,  141. 
Turquand,  Ex  parte,  69,  295. 


Tutt  V.  Clorey,  2(». 

V.  Land,  118. 
Tuttle  V.  Cooper.  220. 
Tyler  v.  Scott,  59. 
Tyng  V.  Thayer.  219. 
Tyrrell  v.  Washburu,  49ft. 


u 


Uhler  V.  Browning,  lOT. 

V.  Semple.  145. 
Ulery  v.  Glnrlch,  225. 
Ulman  v.  Brlggs,  476. 
Union  Nat.  Bank  v.  Dreyfus,  274. 

V.  Underbill,  220. 
Union  Nat.  Bank  of  Chicago  v.  Bank 

of  Commerce  of  St  Louis,  285. 
U.  S.  V.  Astley,  219,  222.  223. 

V.  Baxter,  242. 

V.  Duncan.  292. 

V.  Hack.  134,  292. 

V.  Slielton,  292. 

V.  Thompson.  246,  268. 

V.  Williams,  143. 
U.   S.   Bank  v.   Binney,  89,   107,   195. 

212,  227,  228. 
r.   .^.   Cordage  Co.   v.  WlllMm   Walls' 

Sons  Rope  Co.,  412. 
U.  S.  Nat.  Bank  v.  Underwood,  2(i9. 
University  of  Cambridge  v.  Baldwin. 

103. 
T'pson  T.  Arnold.  462,  47L 
T'niuhart  v.  Powell.  66. 
Usher  v.  Dauncey.  258. 


Vail  V.  Wlntersteln.  14. 
Valentine  v.  Wysor.  415. 
Vallett  V.  Parker,  228. 
Van  Aernain  v.  Bleistein,  500. 
Van  Alstyne  v.  Cook.  482.  486. 
Van  Amrlnge  v.  Ellmaker,  317. 
Van  Brunt  v.  Applegate,  221. 

V.  Mather,  225. 
Vance  v.  Blair,  fi9.  319,  321. 
Vanderburg  v.  Bassett,  219. 
Van  Deusen  v.  Blum.  222.  223. 
Vandike  v.  Rosskam,  143,  444.  449. 
Vanborn  T.  Corcoran,  444,  460. 


.542 


CASES   CITED. 


[Tbe  figures  refer  to  pages.] 


Van  Ingen  v.  Whitman,  443. 

Van  Klcpck  v.  McCabe,  85. 

Van  Kuren  v.  Manufacturing  Co.,  84C 

Vannerson  v.  Cbeathani,  14. 

Van  Ness  v.  Forrest,  319. 

Van  Reimsrtyk  v.  Kane.  2S9. 

Van  Rensst'laer  v.  Emery,  3<;0. 

Van  Kiper  v.  Poppeuhauson,  430. 

\'an  Snndan  v.  Moore.  39(J. 

\'an  Voorhls  v.  Webster.  122. 

Venable  v.  Levlck,  219,  231. 

Nennlng  v.  Leckie,  318. 

Vere  v,  Ashby,  198,  240.  2.53,  380. 

Vermillion   v,   Bailey,   178. 

Vernon  v.  Brun.son,  4';r>. 

V.  Manhattan  Co.,  2tU>.  262. 

V.  Upsfju,  277. 
Vetterloin.  In  re,  297. 
Vice  V.  Flomiii}:.  9."i.  L'.'lti. 
Vilas  Bank  v.  Bullock.  4in,  470. 
Vlles  V.  Banjrs.  380,  r.'Mi 
Vlnal  V.  Land  Co..  3»J3. 
Vinsen  v.  Lockanl.  12.  13. 
Vinson  V.  Beverldire.  43,  01. 
Von  Schmidt  v.  Huntinj,'ton,  fi04. 
Voorhees  v.  .Tones,  .W.  61.  225. 
Voorliis  V.  Cliild.-^'  K\'\\  2Sy. 
Voshmik  V.  Uniuliart.  218. 
Vulllamy  v.  Noble.  2.58. 
Vyse  T.  Foster,  415. 


w 


Waddell  v.  Cook,  14.^ 
Wade  V.  Jenkins,  200. 
Wade-son  v.  Richapl.son.  173. 
Wadley  v.  Jone.'^,  31,'l. 
Wadsworth  v.  Mauniui:.  319. 
Wagponer  v.  Bank,  34,  53. 
Wagon  V.  Clay,  215. 
Wahl  V.  Barnuni,  2L 
Wait,   In  re.  14.5. 

V.    Bank,   279. 

V.  Thayer.  227. 
Walte  V.  High,  218. 
Walden  v.  Sherburne,  63,  236. 
Walkeushaw  v.  Per/.el,  47U,  471,  478, 

489.  497. 
Walker.  Ex  parte.  1.30,  13L 

V.  Harris,  18,  319. 

▼.  Hirsch,  56,  349. 


Walker  v.  House.  357. 

V.  JeCFreys,  330. 

T.  Lumber  Co.,  2l9l 

T.  Matthews,  3. 

T.  Ogden.  .501. 

▼.  Steel.  3S0. 

T.  Trust  Co..  245. 

V.  Walt,  100.  300.  397.  509. 

T.  Whli)plo,  39.5.  390. 
Wallace  v.  Fitzsimmons,  410. 

V.  Hull.  305. 

T.  Kelsall,  389. 

y.  Yeager.  234, 
Waller  v.  Davis.  403.  409. 
Wall  worth   v.   Holt.  .53.  341  343.  358 
■^'alme-vicy   v.  Cooi>er,  224,  246. 
Walmsley  v.  Walmsley,  179. 
Walsh  V.  Adams.  145. 

V.  Kelly.  279. 
Walstron)  v.  IIr>pklns.  269. 
Walton  V.  Butler.  125. 
Wann  v.  Kelly.  20. 
Want  V.  Reece,  320. 
Waplrs-IMatter  Co.  v.  .Mitrhell,  278. 
Warbrltton  v.  Cameron.  320. 
Ward,  In  re,  43. 

V.  Apprlce,  179. 

V.  Brlgham.  72. 

V.  .Tohnson.  272. 

V.  Newell,  428.  485,  494. 

V.   Thomi)Son.  GO. 
Warder  v.  St  dwell.  349. 

V.  White.  307. 
Warner  v.  (Jriswold.  28.  243. 

V.  Smith,  101.  141. 
Warren  v.  Ball.  265. 

V.  Farmer,  277. 

V.  French.  229. 

V.  Sclialnwald,  161. 

V.  Taylor,  183.  279. 

V.  Wheelock,  322. 
Warring  v.  Hill,  316. 
Washburn  v.  Goodman.  167,  257.  411. 
Washington  v,  Washington,  11  (V  . 
Wass  V.  Atwater.  00. 
Waterbury  v.   Express  Co.,  169,  508. 

504. 
Waterer  v.  Wateror,  123. 
Waterlow  v.  Sharp,  221. 
Waters  v.  Harris,  4.59,  490. 

V.  Taylor,  144,  146,  148,  328,  849. 
352,  354,  405. 


CASES   CITED. 


643 


[The  figures  refer  to  pages.] 


Watklns.  Ex  parte,  290. 

V.  Railroad  Co.,  66. 
Watkinson  v.  Bank,  262,  204. 
Watuey  v.  Wells,  405,  40G. 
Watson,  Ex  parte,  81,  284,  298. 

V.  Fletcher.  25,  29. 

V.  Gabby,  148. 

T.  Murray,  25,  29. 

V.  Woodman,  261. 
Watt  V.  Kir  by,  240. 
Watts  V.  Brooks,  26. 

V.  Taft,  443. 
Waugh  V.  Carver,  30,  35,  37,  41,  42, 

46-48,  55,  81,  84-S6.  245.  375. 
Waverly  Nat.  Bank  v.  Hall.  61. 
Way  V.   Stebblns.   132. 
\^■eaver  v.  Rogers,  389. 
Webb,  In  re,  175. 

V.  Fordyce,  178. 

V.  Johnson,  80. 
Webster  v.  Bray,  78,  138,  140. 

V.  Clark,  30,  53.  85. 

V.  Webster,  200. 
Weeks  v.  Rake  Co.,  230. 
Weller  v.  Wood.  4lt4. 
Welles  V.  March,  217. 
Wells  V.  Babcoek,  169,  170. 

V.  Carpenter,  316. 

V.   Ellis,  403. 

V.  Evans,  224. 
Welsh  V.  Canfleld,  185. 

V.  Speaknian,  31. 
Wentworth  v.  Raijrnel,  313. 
Wessels  v.  Weiss,  45. 
West  V.  Skip,  142,  144,  180-182,  400. 
West  Branch  Bank  v.  Fulmer,  234. 
Westcall,  Ex  parte,  2D5. 
West   Coast  Grocery   Co.   v.   Stlnson. 

230. 
Westcott.  Ex  parte,  282. 
Westerlo  v.  Evertson,  317. 
Western  Assur.  Co.  v.  Towle,  220. 
Western  Stage  Co.  v.  Walker,  159. 
W(  stun.  Ex  parte,  277. 

V.  Barton,  103. 
West  Point  Foundry  Ass'n  t.  Brown, 

71. 
West  St.  Lonls  Sav.  Bank  v.  Shawnee 

County  Bank,  227. 
Weyer  v.  Thornburgh,  288. 
Wharton  y.  Douglass,  804. 


Wheat  V.  Rice,  265,  258L 
Wheeler,  Ex  parte,  132. 

V.  Arnold,  172,  305,  807. 

V.  Farmer,  43. 

T.  Sage,  214. 

T.  Van  Wart.  396. 

V.  W^heeler,  306,  322. 
Whetham  v.  L>avey,  155,  158. 
Whetstone  v.  Shaw,  308. 
Whigham's  Appeal,  134,  14& 
Whllldin  T.  Bullock,  468. 
Whlucup  V.  riughes,  19. 
Whipple  V,  Parker,  21.  72. 
Whitaker  v.  Brown,  225,  228. 
Whitall  V.  Williams,  457. 
Whitcomb  v.  Converse.   115-117,  188, 
140,  169,  171.  18U. 

V.  Fowle.  482. 
White  V.  Carpenter,  292. 

V.  Dougherty,  285. 

V.  Elseniau,  443. 

V.  Ilnckett.  4Sa 

y.  Jones,  143. 

y,  Murpliy.  200. 

V.  Ross.  1290. 

V.  White,  409. 
Whitehead  v.  Bank,  4ia 

V.  Hughes.  886. 
Whltehlll  V.  Shickle.  61. 
White's  Adra'r  v.  Wnlde,  300. 
White  Sewlng-Mach.  Co.  v.  Hines,  108 
Whitesides  v.  Lee,  262-264. 
Wliitewell  v.  Warner.  267. 
Wldtewrlght  v.  Stiniiisoii,  482. 
Whiting  V.  Leakln.  50. 
Whitlock  V.  McKechnle.  109,  112. 
Whitman  v.  Leonard,  262. 

v.  Porter,  501. 
Whitney  v.  Dutch,  11. 

v.  Reese,  261. 
Whlttaker  v.  Collins,  24!5. 

V.  Howe.  344,  34.5.  3!9. 
Whittemore  v.  Elliott,  12. 

V.  Macdonell,  444,  450,  461. 
Whlttenton  Mills  v.  Upton,  15. 
Wlilttler  V.  Gould,  271. 
Whitworth  V,  Harris,  77. 

V.  Patterson.  276. 
Wlckham  v.  Davis,  152. 

V.  Wlckham,  219.  268. 
Wlesenfeld  y.  Byrd.  287. 


544 


CASES   CITED. 


[The  Jgures  refer  to  pages.] 


Wlggln  T.  Goodwin,  403. 

V.  Tudor,  246. 
Wlghtnian  v.  Townroe,  36. 
Wilby  V.  Phinney.  30G.  320,  822. 
Wilcox  V.  Derickson,  897. 

V.  Dodge,  223. 

V.  Wilcox,  128. 
Wild  V.  Davenijort,  44,  258,  239. 

V.  Milne,  137. 
Wilder  V,  Keeler,  292. 
Wildes  V.  Chapman.  183. 
Wilea  V,  Maddox.  145.  152. 
Wiley  V.  Griswold.  1220. 
Wilhelm  V.  Caylor.  333. 
Wilklus  V.   Davis,  3U0.  399,  407,  48."), 
488. 

V.  Pojirce,  228. 
Wilkinson  v.  Fraslor.  G3.  6a. 

V.  Henderson,  289. 

T.  Jett,  45. 

T.  Page,  209. 

y.  Tilden,  346. 

V.  Torkington,  77. 
WillPt  V.  Brown,  125,  128. 
Williams.  Ex  parte,  132,  180.  253,  2.".4. 
283.  291. 

V.  Beaumont,  37L 

V.  Pingley.  34a 

V.  Bircli.  202. 

v.  Bowers.  JOO. 

V.  Boyd,  271. 

y.  Connor.  26. 

y.  Farrand.  108. 

y.  Frost.  218,  223. 

y.  Hensbaw.  306,  307.  315. 

V.  .Touos,  21,  20,  29,  198,  251. 

y.  Keats,  261. 

y.  Kilpatrlck.  498. 

V.  Mutlierbaugh,  247. 

y.  Rogers,  67. 

V.  Sontter,  44,  69. 

V.  Williams.  21.  344. 
Williamson,  Ex  parte.  172,   173, 

V.  Barbour,  235. 

V.  Barton.  377. 

V.  Jolinson,  239. 

V.  Wilson,  355. 
Willis  V.  Bremner.  241,  277. 

V.  Henderson,  144. 

V.  Hill,  223. 
Wllmer  y.  Curry,  28a 


Wllsford  V.  Wood.  38a, 
Wilson  V.  Bean.  451. 

V.  Black,  120. 

V.  Campbell.  («.  69.  319. 

V.  Fitcbter.  346,  347.  355,  356. 

V.  Forder.  228. 

y.  Greenwood,  360,  398l 

V.  Jobnstone.  19. 

y.  Lewis.  70. 

V.  Liueberger,  194. 

y.  Lloyd,  271. 

y.  Richards.  215,  228^ 

y.  Robertson,  279. 

y.  Simpson,  196. 

V.  Roper,  303. 

V.  Stanhope,  .342. 

y.  Ptrobacb,  148. 

V.  Tumman.  2."2. 

V.  Wallace,  364,  366L 

V.  Waugh,  74.  261. 

y.  Wliltebead.  39. 

V.  Williams,  227. 

V.  Wilson,  318.  323. 
Wilson's  Ex'rs  v.  Cobb's  Ex'r«,  0,  10. 
Winclie.ster  v.  Gla/.ier,  171. 

V.  Howard.  367. 
WInne  v.  Brundage.  45. 
Wlnsblp  V.  Bank.  214,  224,  228,  231. 
Win.slow  V.  Wallace,  288, 
Winter  v.  Pipher,  58. 

V.  Stock.  112. 
Wintermute  v.  Torrent,  800. 
Winters.  Estate  of.  10. 
Wintle  V.  Crowther.  225. 
Wisconsin  Cent.  R.  Co.  v.  Robb,  248. 
Wlsner  v.  Ocumpaugh,  456.  489. 
^^■itme^  v.  Schlatter.  73. 
Witter  y.  McNlol.  23S. 
Wittram  v.  Van  Wormer,  240,  241, 
Wolbert  v.  Harris,  347. 
Woleott  V.  Gibson,  28. 
W^olfe  V.  Joubert.  108. 
Wolle  V.  Brown,  220. 
Wood,  Ex  parte,  132,  288, 

V.  Barber,  261. 

V.  Beath,  185. 

V.  Braddlck,  220. 

y.  Brush,  304. 

y.  Connell,  154, 

y.  Dodgson,  296. 

y.  Duke  of  Argyll,  87. 


CASES  CITED. 


545 


[The  figures  refer  to  pases.] 


Wood  V.  Finch,  24. 

V.  Goss.  224. 

V.  Luscomb,  247,  378. 

V.  O'Kelley,  364. 

T.  Railway  Co.,  lOa 

V.  Scoles,  117. 

V,  Wilson,  209. 

V.  Woad,  192,  402. 
Woodbury  v.  Sackrider,  234. 
Woodllng  V.  Knickerbocker,  244. 
Woodruff  V.  King,  230. 
Woodward  v.  Cowing,  24. 

V.  Wlnshlp,  215,  231. 
VS'oodward-Holnies  Co.  v.  Nudd,  128. 
Woodworth  v.  Bennett,  28,  29. 

V.  Spaffords,  271. 
Wooldrldge  v.  Irving,  218. 
Worcester  Corn  Exchange  Co.,  In  re, 

174,  229. 
Word  V.  Word,  3M. 
U'orrall  v.  Muun.  419. 
Wray  v.  Hltchlnson,  405. 

V.  Mile.stone,  310.  316. 
Wright  V.  Boynton,  82. 

V.  Cumpsty,  307. 

V.  Davidson,  GO. 

V.  Duke,  161. 

V.  Herrlck,  375. 

T.  Hooker,  106.  107. 

V.  Hunter,  316,  338. 

V.  MIchie,  317. 

V.  Pulham,  226,  259. 

T.  Radcliffc.  142. 

y.  Russel,  103. 
Wrtghtson  v.  Pullan,  269,  264, 
Wyckoff  V.  Anthony,  219,  220. 
WycoCf  T.  Pumell,  816. 
GEO.  PART.— 35 


Wyld  V.  Hopkins,  71. 
Wyman  v.  Railroad  Co.,  68w 


Tale  V.  Eames,  261. 
Yates  V.  Finn,  414. 

V.  Lyon.  13. 
Yobe  V.  Barnet,  117. 
Yoho  V.  McGoveru,  272. 
Youye,  Ex  parte,  290. 
York  V.  Clemens,  22. 

V.  Orton,  270. 
Vi'rks  V.  Tozer,  176. 
Yorkshire    Banking   Co.   r.   BeatJoiL 

227. 
Vouug.  Ex  parte,  8,  295. 

V.  Axtell.  84,  86,  375. 

V.  Brick,  299,  300,  303. 

V.  Frier,  335. 

V.  Hoglan.  804. 

V.  Hunter.  380. 

V.  Kelghly,  149. 

V.  Tlbbltts,  263. 

V.  Wheeler,  22. 
Younplove  v.  Llebliardt,  SOS. 
Youuts  V.  Starnes,  409. 


Zabrlskle  v.  Railroad  Co.,  15©. 
Zimmerman  v.  Erhard,  108. 

V.  Huber,  172. 
Zollar  V.  Janvrln,  260,  262. 


INDEX. 

[the  figures  refer  to  pages.] 


A 

ABANDONMENT, 

of  interest  in  partnership,  effect,  381. 

ACCEPTANCE, 

of  bills  of  exchange,  implied  power  of  partner,  224. 

ACCOUNTING, 

affairs  of  illegal  partnership,  29. 

effect  of  transfer  of  share,  155. 

right  to  interest  on  balances.  1G8-171. 

right  of  partner  to  indemnity  and  contribution,  171-170. 

stipulations  in  articles  as  to,  UOi— 206. 

keeping  proper  books  of  account,  stipulation  in  articles,  204. 
annual  accounts,  205. 
general  account  upon  dissolution,  206. 
■ult  in  equity  for  partnership  accounting  to  enforce  obligations  between  Bra 

and  members,  304-;i08. 
•ait  in  equity  for,  333. 

right  to  accounting,  334. 

effect  of  acquiescence  in  account,  328. 
laches  as  a  bar  to  suit  for  an  account,  3281 
upon  dissolution,  3^54  et  seq. 
who  entitled  to  account,  334,  335,  note  112, 
without  dissolution,  337  et  seq. 
general  or  limited  account,  338. 

account  where  one  partiM-r  withholds  what  firm  is  entitled  to,  839. 
in  cases  of  exclusion,  339,  340. 

defendants  seeking  to  drive  plaintiff  to  dissolve,  Jt4(X 
where  concern  has  failed,  341,  342. 
execution   against  one  partner's  interest,   343, 
agreements  for  periodical  accountings,  343. 
result  of  latest  cases,  343. 

AOCOUNT  RENDERED. 

power  of  partner  to  bind   co-partners  by,  218. 
r,EO.PART.  (547) 


548  'T^DEx. 

[The  figures  refer  to  pages.] 

A.CCOUNTS, 

duty  to  keep  and  right  to  inspect,  178,  179. 

effect  of  keeping  no  books  or  of  destroying  them,  178, 

ACKNOWLEDGMENT, 

of  certificate  of  limited  partnership,  432. 

ACQUIESCENCE, 

in  account,  effect,  328. 

ACTIONS, 

Id  firm  name,  101,  112. 
between  partners,  298-361. 
at  law,  298-304. 

by  partner  on  obligation  to  firm  from  co-partner,  298  et  scq. 

against  partner  on  obligation  from  firm  to  plaintiff,  298  et  seq. 

on  partnership  claim  or  liability  at  law,  298-304. 

reason  why  partner  cannot  sue  co-partner  at  law  on  partnership  claim 

or   liability,  299. 
by  partner  against  co-partner  on  obligations  to  firm,  298,  302,  303. 
by  partner  against  co-partner  on  obligations  of  firm,  303. 
•et-off  of  claims  growing  out  of  partnership,  304. 
•xceptions  to  rule  that  no  action  at  law  lies  between  partners,  304-308. 
Massachusetts  rule,  305. 

for  final,  though  unascertained,  balances,  305. 
partnership  in  single  transactions,  307. 
single   unadjusted   items,  308. 
action  on  individual  obligation,  314—325. 

claims  not  connected  with  partnership,  315, 
claims  for  agreed  final  balances,  315-317. 
express  contract*  between  partners,  317-321. 

illustrations,   318-321. 
losses  caused  by  partner's  wrong,  322-325. 
under  the  Code,  308,  309. 

between  firms  with  a  common  member,  309-314. 
equitable  actions  in  general,  325  et  seq. 

enforcement  of  partnership  claims  or  liabilities  in  equity,  304—308. 
equitable  jurisdiction,  325. 

general  rules  as  to  equitable  interference  between  partners,  325,  826. 
necessity  of  praying  for  dissolution,  326,  327. 

modern   rule,  327. 
noninterference  In  matter  of  internal  regulation,  327,  328. 
effect  of  laches,   328-332. 

laches  a  bar  to  relief  in  equity,  328. 
acquiescence  in  account,  328. 


INDEX.  549 

[The  figures  refer  to  pages.] 

ACTIONS— Continued, 

laches  a  bar  to  a  suit  for  an  account,  328. 
laches  in  enforcing  agreements  for  partnerships,  329L 
where  partnership  is  a  mining  partnership,  330. 
effect  of  evidence  of  abandonment,  331. 
accounting  and  dissolution,  332,  333. 
right  to  accounting,  334. 
accounting  upon  dissolution,  334  et  seq. 
accounting  without  dissolution,  337  et  seq. 
general  or  limited  account,  338. 

account  where  one  partner  withholds  what  firm  Is  entitled  to,  38IL 
account  in  cases  of  exclusion,  339,  340. 
defendants  seeking  to  drive  plaintiff  to  dissolve,  340. 
account  where  concern  has  failed,  341,  342. 
execution  against  one  partner's  interest,  343. 
result  of  latest  cases,  343. 
agreements  for  periodical  accountings,  343. 
•pecific  performance,  344,  345. 
Injunctions  and  receivers,  345. 
Injunctions,  345-350. 

injunction  granted  though  no  dissolution  is  sought,  348b.    " 

Illustrations,  347. 

Injunction  in  action  for  dissolution,  347,  348. 

death  of  member,  348. 

injunction  to  protect  partners  from  the  representatlyes  of  a  co-partner, 

348. 
injunction  to  enforce  special  agreements,  348. 
injunction  in  case  of  misconduct,  349. 

partner  applying  for  injunction  must  come  with  clean  banda,  349. 
to  restrain  holding  out,  350. 
receivers,  appointment  of,  350  et  seq. 

principle  on  which  receivers  are  appointed,  350,  351, 

necessity  of  prayer  for  dissolution,  352,  353. 

receiver  not  appointed  unless  a  dissolution  is  sought,  252. 

exceptions,  352,  353. 
misconduct  of  partner  a  ground  for  a  receiver,  358. 
receiver  appointed   where  partners  have  by  agreement  diveated  thaiB- 

selves  of  the  right  of  winding  up,  361. 
course  of  court  where  partnership  is  denied,  361 
between  partners  and  third  persons,  362  et  seq. 
parties  to  action  on  firm  claim,  362-372. 
claims  arising  ez  contractu,  363. 


550  INDEX. 

[The  figures  refer  lo  pages.] 

A.OT10NS— Continued, 

contracts  In  firm  name,  363. 

dormant  partners  proper,  but  not  necessary,  parties,  363. 
nominal   partners,   when   necessary  or  proper  parties,  364. 
contracts  in  name  of  partner,  365-370. 
exceptions  to  rule,  865. 

when  partner  must  sue  alone,  sealed  instruments,  366. 
negotiable  instruments,  366. 
contract  with  partner  alone,  367. 
when  partner  may  sue  either  alone  or  jointly  with  co-partner, 
868. 
firm  as  an  undisclosed  principal,  869. 
recovery  of  money  paid  under  fraud  or  mistake,  868. 
reason  and  limitation  of  rule,  369. 
dormant  and  nominal  partners,  869. 
claims  arisinj;  ex  delicto,  371,  372. 
liabilities  arising  ex  contractu,   general   rule,  373L 
parties  to  action  on  firm  liability,  372. 
exceptions  to  rule,  372. 
dormant  partners,  374. 
nominal  partners,  375. 

when  agent  partner  must  be  sued  alone,  deeds,  378w 
negotiable  instruments,  876. 
credit  given  exclusively  to  agent  partner,  376. 
firm  as  an  undisclosed  principal,  377. 
liabilities  arising  ex  delicto,  378. 
efifect  of  cliauges  in  firm.  378  et  seq. 

assignment  of  claims  to  new  firm,  3S0L 
novation,  380. 

retirement  of  old  member,  381-384. 
assumption  of  debts  by  new  firm,  381. 
bankruptcy  and  insolvency,  885,  888. 
disqualification  of  one  partner  to  sue,  387-391. 

claim  arising  from  wrongful  act  of  one  partner,  887-392. 

wrongful  act  done  in  course  of  partnership  business,  888. 

wrongful  act  not  in  course  of  partnership  business,  ;'>88. 

where  firm  chattels  other  than  money  are  wrongfully  disposed  of  by 

one  partner,  389. 
where  firm  niouey  is  wrongfully  disposed  of  by  one  partner,  39L 
action  in  firm  name,  892. 
limited  partnerships,  between  members,  493.  494. 

between  firm  and  third  persons,  494. 
by  and  against  joint-stock  companies,  502. 


INDEX.  Wl 

[The  figmres  refer  to  pagrea.! 

ADEQUATE  REMEDY  AT  LAW, 

equitable  actions  between  partners,  325. 

ADMISSION 

of  new  member  to  firm,  eflfect,  879-382. 

when  new  member  may  join  as  plaintiff.  380. 

when  new  member  may  be  made  a  defendant,  assamptlon  of  debta,  SSI- 
ADMISSIONS 

power  of  partner  to  bind  firm  hj,  220. 

ADVANCES, 

by  partner,  a  loan,  and  not  capital.  117. 
not  considered  voluntary  payments.  174. 
stipulation  in  article*  aa  to,  200. 

AFFIDAVIT. 

accompanying  certificate  of  limited  partnership.   441. 
what  it  must  contain,  44L 

effect  of  false  statement,  all  partners  liable  to  general  partners,  450l 
limited  partnership  does  not  begin  cntil  aCBdavit  is  filed,  450. 

AGENCY. 

distinguished  from  partnership,  8. 

mutual  agency  aa  a  tert  of  partnership,  49.  50. 

Cox  T.  Hickman.  37. 
agents  of  inchoate  corporation,  liabilities,  72,  note  181. 
of  partner  to  bind  firm,  212. 

AGENTS. 

power  of  partner  to  bind  firm,  21& 

AGREEMENT. 
see  "Contract*." 

ALIEN  ENEMY, 

partnership  with,   illegal,  28. 

ALIENS, 

capacity  to  be  partners,  10,  11. 

ALTERATION, 

effect  on  limited  partnership,  468  et  «e<|. 

what  constitutes.  470,  471. 

eped&l  partner  must  participate  in,  471.  472. 

consequences  not  retroactive,  472. 

operates  as  diasolution  In  sense  of  termination  of  limited  HabiUty,  ffifl. 

A2sNUAL  ACCOUNTS, 

stipulation  in  articles,  206. 


552  INDEX. 

[The  figures  refer  to  pa^^es.] 

ANNUITIES, 

out  of  profits,  partnership,  36. 

share  of  profits  as  annuity,  43,  note  134. 

APPEARANCE, 

power  of  partner  to  enter  an  appearance,  217. 

APPORTIONMENT, 

of  premium  on  premature  termination  of  partnership,  19, 

ARBITRATION, 

stipulation  in  articles  for,  209. 

power  of  partner  to  bind  firm  by  submission  to.  217, 

ARTICLES  OF  PARTNERSHIP, 

inchoate  partnerships,  articles  to  be  drawn  up,  70l 

doty  of  partners  to  conform  to,  176,  177. 

in  general,  188-210. 

defined,  188. 

purpose  and  efifect,  188. 

•onstruction  in  general,  189. 

rules  of  construction,  189-196. 

articles  not  intended  to  define  all  rights,  powers,  and  duties,  1901 

construction  with  reference  to  object  of  partnership,  19L 

construction  so  as  to  defeat  fraud,  192. 

provisions  waived  or  varied  by  tacit  agreement,  193. 

acts  of  majority  with  respect  to  changes,  194. 

new  partners,  how  affected  by  changes,  194. 

original  articles  apply  to  partnerships  continued  under  them,  189^ 

provisions  applicable  during  term  of  partnership,  195. 
nsual  clauses  in  articles,   196-210. 

general  nature  of  business,  197. 

time  when  business  shall  commence,  198, 

name  or  style  of  firm,  199. 

duration  of  relation,   199. 

capital  advances,  etc.,  200. 

rights  of  partners  in  firm  property,  203. 

profits  to  be  distributed,  203. 

duties  resting  upon  partners,  203. 

keeping  of  proper  books  of  account,  204. 

restraint  upon  partners  as  to  their  transacting  similar  bnslDeu  on  indiridnal 
account,   205. 

decision  of  differences  by  a  majority,  200. 

annual  accounts,  205. 

general  account  upon  dissolution,  208, 


INDEX.  563 

[The  figures- refer  to  pages.] 

ARTICLES  OP  PARTNERSHIP— Continued, 

representatives  of  deceased  partner  succeeding  to  his  share  In  firm  btud- 

ness,  206. 
retirement  of  a  partner,  and  assignment  of  his  share,  207. 
clause  of  expulsion,  208. 
arbitration,  209. 
liquidated  damages,  210. 
action  at  law  between  partners  for  violation  of,  321. 
ASSETS, 

■e«,  also,  "Property." 
partner's  lien  on  assets,  181. 
ASSIGNMENT, 

of  partnership  share,  effect,  153* 

stipulation  in  articles,  207. 
of  firm  claims  to  new  firm,  joinder  of  Incoming  pn  rtner,  380. 
retirement  of  partner,  assignment  of  claims  to  lu  w  firm,  382. 

ASSIGNMENT  FOR  BENEFIT  OF  CREDITORiS, 
power  of  partner  to  make,  217. 
limited  partnerships,  483,  484. 
statutory  provisions,  483,  484. 

ASSOCIATIONS, 

societies  and  clubs  not  having  gain  for  their  object  not  partnership*,  2i, 
ASSUMPTION  OF  DEBTS, 

by  Incoming  partner,  251-256. 

by  new  firm,  incoming  partner,  381. 

by  new  firm  formed  by  retirement  of  old  merabtT,  381-384. 
ATTORNEYS  AT  LAW, 

partnership  with  unhcensed  persons,  27. 

partnerships  between,  implied  power  to  bind  firm  on  negotiable  paper,  22SI. 

AUTHORITY, 

of  partner,  express  authority,  212,  213. 
Implied  authority  to  bind  firm,  213-21QL 

necessity  the  limit  of,  215,  216. 

extraordinary  necessity,  215,  216. 
particular  implied  powers  of  partners,  21(>-221. 
partner's  implied  authority  to  borrow,  228,  22d> 

B 

BALANCES. 

action  between  partners,  for  final  though  nnascertained  balance,  304.  305. 
for  a^rreed  final  balances,  815-317. 


^54  INDEX 

(The  figures  refer  to  pages.] 

BANKING, 

limited  partnerships  cannot  usually  engage  In,  423,  428. 
states  in  which  limited  partnerships  may  engage  in,  427. 
BANKRUPTCY, 

see  "Insolvency." 
partner  in  bHiikrupt  firm  cannot  prove  in  competition  with  creditors,  28a 
priorities  in  partner's  separate  estate,  firm  creditor  petitioning,  291. 
government  a  firm  creditor,  rights  in  separate  estate.  292. 
of  one  member  not  a  ground  for  a  receiver,  356. 
of  firm,  effect  on  actions  by  ami  against  parties,  38.".  386. 
as  a  cause  of  dissolution,  subject  to  stipulation,  39G-399. 
of  firm  dissolves  partnership,  403. 
BENEFITS. 

right  to  benefits  from  transactions  concerning  firm  interests,  162-164. 
BILLS  AND  NOTES, 

implied  power  of  partner  to  bind  firm  on,  224-22S. 
trading  and  nontradinp  firms,  224-228. 
bona  fide  holders.  22r,-228. 
liability  of  partners  on,  238,  239. 
BONA  FIDE  50LDERS. 

of  firm  paper,  rights  of,  228. 
BOOKS  OF  ACCOUNT. 

duty  to  keep  and  right  to  Inspect,  178,  179. 
effect  of  keeping  no  books  or  of  destroying  them,  178,  179. 
keeping  of,  stipulation  in  articles.  204. 
BORROWING, 

implied  power  of  partner  to  borrow,  221.  228,  229. 
money  borrowed  by  one  partner,  liability  of  firm,  240. 
BOVIL'S  ACT,  43-48. 
BROKERS, 

agreeing  to  divide  commissions  not  necessarily  partners.  68. 
limited  partnerships,  when  prohibited  to  engage  in  brokerage  busineM,  420. 
BUSINESS, 

stipulation  In  articles  aj  to  general  nature  of,  197. 
BUYING, 

partner's  implied  power  to  buy  property,  231-234. 


CAPACITY, 

of  persons  to  be  partners,  10-17. 
partnerships  between  firms,  16. 


INDEX.  565 

[The  figures  refer  to  pages.) 

CAPITAL, 

of  partnership  defined,  113. 

invariable,   113. 

contributions  other  than  in  money,  114. 

is  firm   property,   114. 

partner's  rights  as  to  capital,  114-117. 

presumption  of  equality  of  rights  in.  115. 
losses  impairing,  116,  117. 
advances  by  partner,  117. 
limitations  as  to  contributions  to,  118,  119. 
interest  on  unpaid  subscription  to,  168. 
stipulation  in  articles  as  to,  200. 

of   limited   partnerships,  contribution   of  general   and   special  partners,  442   et 
seq. 

CARE, 

duty  of  partner  to  exercise,  160. 

CARRIERS, 

connecting  carriers  not  partners,  when,  65w 
limited  partnerships  as,  425. 
CERTIFICATE, 

of  limited  partnership    429  et  seq. 

facta  required  to  be  stated  in,  429^31. 
acknowledgment  and  proof,  432  et  seq. 
record  of,  433. 
publication,  435  et  seq. 

time  of  publication,  436. 
proof  of  publication,  440. 
affidavit  to,  441. 

effect  of  false  statement,  all  partners  liable  as  general  partners,  450. 
limited  partnership  does  not  begin  until  certificate  is  made,  acknowledged, 
and  recorded,  450. 

CHANGE, 

in  membership  of  firm,  effect,  102,  104. 

In  nature  of  partnership  business,  powers  of  majority,  158,  15& 

in  articles  of  partnership,  193,   194. 

act  of  majority  in  respect  of  changes,  194. 
effect  of  changes  in  firm,  parties  to  action,  378  et  seq. 
when  change  in  firm  discharges  contract,  383. 

CHARTER  PARTY, 

power  of  partner  to  bind  firm  by,  219. 
CHATTEL  MOHTGAGES, 

power  of  partner  to  execute,  218. 


556  INDEX. 

[The  figures  refer  to  pages.] 

CHOSES  IN  ACmON, 

partnership  shares  are  choses  in  action,  137. 

CLUBS, 

not  partnerships,  24. 

COMBINATIONS, 

partnerships  illegal  as  nnlawfnl  comhinations,  28. 
to  enhance  price,  partnership  illegal,  28. 

COMMANDITE, 

la  society  en  commandite,  see  "Limited  PartnershiD." 

COMMLSSIONS. 

partnership  between  persons  sharing  commissions,  35. 

CO:\LMON  MEMBER, 

actions  between  firm  with,  309-314. 

COMMUNITY, 

of  ownership,  see  "Co-ownership.** 

COMPENSATION, 

for  loss  caused  firm  by  competition  of  partner,  164 

of  partner  for  services,  lOO-lGS. 

for  winding  up  firm  affairs,  411. 

member  of  joint-stock  company  not  entitled  to,  in  uKsfoce  of  agreement,  BOO. 

COMPETENCY, 

of  persons  to  be  partners,  10-17. 
partnerships  between  firms,  16. 

COMPETITION, 

right  of  partner  to  compete  with  firm,  164. 
stipulation  in  articles,  205. 

CONFESSION  OF  JUDGMENT, 
power  of  partner,  217. 

CONFIDENTIAL  RELATIONS, 

partnership  a  confidential  relation,  160. 

right  to  benefits  from  transaction*  concerning  firm  interesta,  162-16C 

CONFLICT  OF  LAWS, 

limited  partnerships,  427,  428, 

CONNECTING  CARRIERS, 
are  not  partners,  when,  66w 

CO-OWNERS, 
lien  of.  184. 


INDEX.  657 

[The  figures  refer  to  pages.] 

CO-OWNERSHIP, 

distinguished  from  partnership,  5. 

co-owuers  sharing  profits,  6. 

joint  purchasers  of  goods  for  resale,  7. 

part  owners  sharing  produce  of  common  property,  8. 

of  profits  the  ultimate  test  of  partnership,  50-52. 

co-owners  of  chattels  dividing  gross  earnings  not  partners,  66L 

CONSIDERATION, 

of  contract  of  partnerships,  17-20. 
sufficiency  of,  17. 

profits  to  be  shared,  but  losses  not,  17. 
premiums,  18. 

premiums  returnable  in  cases  of  fraud,  18. 

apportionment   of   premium   when   partnership   ceases  sooner   than  ex- 
pected, 19. 
return  of  premium  where  consideration  for  it  has  failed,  19. 

CONSTRUCTION, 

of  articles  of  partnership,  189-196. 

articles  not  intended  to  define  all  rights,  powers,  and  duties,  190. 

with  reference  to  object  of  partnership,  191. 

so  as  to  defeat  fraud,  etc.,  192. 

provisions  of  articles  waived  or  varied  by  tacit  agreement,  193. 

acts  of  majority  in  respect  of  changes,  194. 

new  partners,  how  affected  by  changes,  194. 

original  articles  apply  to  partnerships  continued  under  them,  195. 

provisions  applicable  during  term  of  partnerehip,  195. 
strict  or  liberal  construction  of  limited  partnership  statutes,  422,  423. 

CONTEMPLATED  PARTNERSHIPS, 
in  general,  67-70. 
partnership  articles  to  be  drawn  up,  70. 

CONTINUANCE, 

of  partnership,  original  articles  apply,  when,  195, 

CONTRACT, 

partnership  established  only  by,  9. 
of  partnership,  see  "Articles  of  Partnership." 
competency  of  parties,  10-17. 
consideration,  17-20. 
formalities,  20. 
statutes  of  fraud,  21. 
subject-matter,  23-29. 

gain  the  object  of  j)artnership,  23. 

societies  not  having  gain  for  their  object,  24. 


658  INDEX. 

[Tbe  flfures  refer  to  pages.] 

CONTRACT— Continued, 

what  enterprises  may  be  subject  of  a  partnership  agreement,  20^ 
what  partnerships  are  illegal,  25-29. 
efifect  of  illegality,  29. 
contemplated  partnerships,  67-70. 
power  of  partner  to  yary,  219. 

partner's  implied  power  to  execute  simple  contracts,  230,  231. 
liability  of  partners  in  contract,  236. 

restriction  by  dissent,  23G,  237. 

form  of  contract,  237-242. 

sealed   instruments,   238. 

negotiable   instruniputs,   238. 

simple  contracts,  239. 

liability  of  partners  on  simple  contract*,  239-242. 

firm  benefited   by  partner's  contrart.  240. 

money  borrowed  by  one  partner,  240. 

goods  supplied  to  one   partner.  241. 
Joint  and  several  liability  of  partners,  240w 

release  of  one  partner,  2-li». 

covenant  not  to  sue  one  partner,  246. 

distinction  between  torta  and  breaches  of  contract,  248. 
express  contracts  between   partners,  action   at   taw   for  breach,  817-821. 
for  partnership,   laches   in  enforcing,   329. 
for  periodical  accountings,  enforcement  in  equity,  343. 
action  on  claims  arising  ex  contractu,  363  et  seq. 

contracts  in  firm  name,  363  et  seq. 

Id  name  of*  partner,  3(>5  et  seq. 
parties  plaintiff,  3(35  et  seq. 
sealed  instruments,  366. 
negotiable  instruments,  368. 
contract  of  partner  alone,  367. 
discharge  of,  by  change  in  firm,  383. 
of  limited  partnership  engaging  in  prohibited  business  not  invalid,  42T. 

CONTRIBUTIONS    TO   CAPITAIj, 
other  than  in   money,   114. 
property,  charges  against,  114. 
presumption  of  equality,  115. 

contribution  of  services,  118. 
limitations  as  to,  118,  119, 
of  general  and  special  partners,  442  et  seq. 

general  partner  need  make  no  contribution  to  firm  capital,  442, 

special  partner  must  usually  contribute  cash,  442. 

special  partner  in  some  states  may  contribute  property,   442. 


INDEX.  669 

1  The  figures  refer  to  pages.] 

CONTRIBUTION  TO  LOSSES, 

Illegal  partnership,  29. 

right  of  partner  to,  171-178i. 

limit  as  to  amount  of,  174. 

advances  not  considered  voluntary  paymenta,  174. 

right  to  when  outlay  concerns  an  illegal  act,  174. 

right  to  when  loss  was  due  to  partner's  own  default,  ITBk 

when  partner  has  alone  become  bound,  175. 

when  is  the  right  to  contribution  enforceable,  176. 

ratification  of  unauthorized  act,  176. 

when  partner  fails  to  conform  to  agreement.  176,  1T7, 

action  at  law  between  partners  for,  300,  note  2. 

loss  caused  by  partner's  wrong,  322-325. 

CONVERSION. 

equitable  conversion  of  partnership  realty  into  personalty,  127-129. 
of  partnership  property  into  separate  property,  and  vice  versa,  119,   129-132. 
rights  of  creditors,  277. 

CORPORATIONS, 

distinguished  from  partnerships,  4, 

capacity  to  be  partners,  10,  15. 

promoters  of,  not  partners,  70,  71. 

defective  corporations,   liability  of  stockholders  aa  partners,  71-73. 

conducting  business  after  expiration  of  charter,  liability  of  members  as  part 

ners,  73. 
liability  of  ofBcers  and  stockholders  in  defective  corporation,  78. 
use  of  corporate  name  by  partnership,  109. 
infringing  trade  name,  remedy,  111. 

COURSE  OF  BUSINESS. 

liability  of  firm  for  torts  of  partner  acting  in,  2412-240^ 

COURT  AND  JURY, 

partnership  a  mixed  question  of  law  and  fact,  33. 

COVENANT, 

not  to  sue  one  partner,  effect  on  others,  246,  268^ 

CREDITORS. 

see,  also,  "Rights  and  Liabilities.** 
rights  in  firm  property,  129. 
■ubrogation  to  partner's  lien,  130. 
conversion  of  partnership  into  separate  property,  130. 

what  amounts  to  fraud  in  connection  with  such  transfers,  180. 
rights  in  case  of  insolvency  of  firm,  131. 

preferences  among,  not  necessarily  evidence  of  fraud,  131. 


560  INDEX. 

TThe  figures  refer  to  pages.] 

CREDITORS— Continued, 

no  formal  instrument  essential  to  the  conversion,  132. 
rights  in  firm  and  separate  property,  273-297. 
rights  worked  out  through   partner's  lien,  273. 
no  lien  unless  expressly  created,  273. 
rights  of  firm  creditors  in  firm  property,  274-280. 
nominal  partner  no  actual  firm,  275. 
dormant  partner  no  ostensible  firm.  276. 
Joint,  but  not  firm,  debt,  276. 

conversion  of  firm  into  separate  property,  277-280. 
rights  of  separate  creditors  in  firm  property,  283,  284. 

separate  creditors  cannot  prove  In  competition  with  firm  crediton,  281 
rights  of  separate  creditors  in  separate  property,  285-287. 
general   rule,  287-293. 
fraud,  287. 

exceptions  to  rule,  no  joint  estate,  etc.,  288. 
distinct  trades,  290. 
firm  creditors  petitioning,  291. 
government  a   firm   creditor,   292. 
legal  priorities  previously  acquired,  292. 
marshnlinK  assets,   firm   and   separate  creditors.  298. 
rights  of  partners  in  separate  property  of  co-partners,  293-298. 

priority  of  separate  and  firm  creditors  in  estate  of  co-partner,  293-296. 
priorities,  no  joint  debts,  294. 

fraud,  distinct  trades  inchoate  partnersbips,  294. 
separate  estate  insolvent.  296. 
rights  of  joint  and  separate  creditors  In  firm  and  separate  property,  298, 
297. 
of   limited    partnerships,    property   of    Insolvent   limited    partnership   a    trust 
fund  for,  480-482. 
when  trust  begins,  482. 
special  partner  as  a  creditor,  48i, 
meaning  of  "insolvency,"  484. 
application  of  statute,  485. 

CROPS, 

cultivated  on  ahares,  partnership,  OOL 


INDKX.  661 

(Tlie  figures  refer  to  paces.] 

Q 

DAMAGES, 

liquidated  damages,  210. 

DEATH, 

dissolution  of  partnership,  termination  of  liability,  25T, 

executor  continuing  business,  258. 

liability  of  deceased  partner's  estate,  272,  273. 

of  one  member  of  firm  not  a  ground  for  a  reedTcr,  S56L 

of  member,  actions  against  survivors,  384. 

dissolution  by,  stipulation  to  the  contrary,  396,  397. 

DEBTS, 

see  "Creditors." 
assumption  of,  by  incoming  partner,  251-256. 
payment  of  firm  debts  on  dissolution,  413. 
of  limited  partnership,  liability  of  general  and  special  partner*.  456L 

DEED, 

of  real  property  in  firm  name,  effect,  112. 
partner  has  no  implied  power  to  execute,  222. 
liability  of  partners  on  sealed  instruments,  23& 
in  name  of  one  partner,  lialiility  of  firm,  375. 
when  agent  partner  must  be  sued  alone,  375. 

DELECTUS  PERSONARUM, 

the  doctrine  explained,  74,  75. 
none  in  joint-stock  compauics,  7B. 
none  in  mining  partnerships,  75. 
does  not  prohibit  subpartnerships,  75. 
transfer  of  partnership  shares,  153-156L 
joint-stock  companies,  498. 

DILIGENCE, 

duty  of  partner  to  exercise,  160. 

DISCHARGE, 

of  partnership  debt  by  payment  of  one  partner,  26S. 
of  contract  by  change  in  firm,  383. 

DISQUALIFICATION, 

of  one  partner  to  sue,  effect,  387-391. 

DISSOLUTION, 

by  operation  of  law,  termination  of  partner's  liability,  257. 
by  acts  of  partners,  259-261. 

retirement  of  dormant  partners,  necessity  of  notice,  264. 
GEO.PART.— 38 


o62  INDEX. 

[The  figures  refer  to  pages.] 

DI SSOLUTI  ON— Continued, 

necessity   of  praying  for  dissolution,  equitable  actions   between   partners,   826, 
327. 

motlern  rule,  'A2~. 
suit  in  equity  for,  332. 
accounting  upon,  334  et  seq. 

general  account  upon,  gtipulation  in  articles.  206. 
accounting  without,  337  et  seq. 

injunction  granted  though  no  dissolution  is  souj^ht,  .'^48. 
receivers  not  appointed  unless  dissolution  be  sought,  .■^.">2. 

exceptions  to  rule.  352. 

necessity  of  (ir.iyer  for  in  an  action  for  a  receiver.  3.'i3. 

receiver  not  ordered  in  every  case  where  case  for  dissohitlon  U  not  made, 
354.  355. 
causes  of  di.s.soiution,  partnership  for  a  <lefinite  time,  3U3  3U3k. 

paitiiership  for  an  indefinite  time,  395,  396. 
causes  suliject  to  8tii>ulation.  .396. 

bankruptcy  of  n  partner,  .39t3, 

death  of  a  |)artMiT.  ."'.97. 

alienation  of  partner's  share,  74,  397. 

change  in  membership,  102.  155. 

marriage  of  a  feme  sole  partner,  401. 

expulsion  of  partner,  401.  402. 
eaases  not  subject  to  stipulation,  402—404. 

events  rendering  business  unlawful,  war,  402. 

baiiiiruplcy  of  firm,  4i>;{. 

effect  of  an  execution  against  a  partner,  403. 
causes  for  which  a  court  will  decree  a  dissolution,  404  et  seq. 

Insanity  or  other  incompetency,  404. 

misconduct  of  a  partner,  404. 
degr(t>  of  misconduct.  405. 

impossibility  of  making  profit,  ground  for  Judicial  decree  of,  406k 
consequences  of  dissolution,  as  to  third  persons,  4U7,  408* 

notice  of  dissolution,  407. 

payment  of  claims,  408. 
consequences  of,  as  to  partners,  408  et  seq. 

wiiidiii;:  up  busii!es.s  4(.lS. 

surviving  partner,  410. 

notice  of  dissolution,  411. 

sale  of  good  will,  412,  413. 

payment  of  firm  debts,  413. 

earnings  after  dissolution,  414. 

distribution  of  surplus  property,  415. 

distribution  of  firm  capital  on,  114-117. 


INDEX.  668 

[The  ligui'es  refer  to  pages.] 

DI SSOLUTI  ON— Continued, 

of  limitii!  partuership.  487  et  seq. 

termination  of  future  liability,  487. 
by  uporation  of  law,  487. 
notice,  487. 
alti'iatiou,  4G8  et  seq. 
termination  by  limitation,  487. 
bankrujitcy  and  insolventy,  48S. 
abandonment,  488. 
death.  488. 
judicial  decree,  489. 

conveyances  of  one  partner's  interest.  489. 
statutory  provisions,  49u. 
by  act  of  parties,  491—493. 
change  from  limited  to  general  liability,  493. 
withdrawal,  alteration,  or  interference,  498. 
of  joint-stock  companies,  503. 
DISTRIBUTIO.X. 

of  assets  between  firm  and  separate  creditors,  273-297. 
of  surplus  property  on  dissolution,  415,  41G. 

DIVIDENDS, 

division  of  profits,  184-187. 
DOCTORS. 

partnership  with  unlicensed  persons,  validity,  27. 

partnerships   between,   implied   power  to  bind   firm   on   negotiable  Instruments, 
225. 
DORMANT  PARTNERS, 

defined,  95. 

right  to  have  firm  property  applied  to  firm  debts.  276. 

no  ostensible  firm,  no  priority  between  partnership  and  individual  creditors,  276. 

proper,  but  not  necessary,  parties,  when,  363. 

as  parties  in  action  on  contract  in  name  of  one  partner,  370. 

joinder  in  action  on  firm  liability  arising  ex  contractu,  374. 

E 

EQUALITY. 

presumption  of,  rights  in  firm  property,  115. 
portnership  shares,  presumption  of,   138-141. 
meaning  of  equality,   139. 

evidence  showing  inequality  of  [)artnersliip  shares,  140L 
EQUITABLE  CONVERSION, 

when  partnership  realty  deemed  personalty,  127-12';). 


564  INDEX. 

[The  figures  refer  to  pages.] 

RQUITT, 

■uita  in  equity  between  partners,  partnership  accounting,  304-308. 
jurisdiction,  325. 

general  rule  as  to  interference  between  partners,  325,  326. 
necessity  of  praying  for  dissolution,  326,  327. 

modern  rule,  327. 
noninterference  in  matter  of  internal  regulation,  327,  328w 
laches  as  a  bar  to  relief,  328-332. 

a  bar  to  a  suit  for  an  account,  328. 

acquiescence  in  account,  328. 

laches  enforcing  agreements  for  partnerships,  328. 

laches  where  a  partnership  is  a  mining  partnership,  83<X 

effect  of  evidence  of  abandonment,  331. 
accounting  and  dissolution.  332  et  seq. 
right  to  accounting,  334. 
accounting  upon  dissolution,  334  et  seq. 
accounting  without  dissolution,  337  et  seq. 
general  or  limited  account,  338. 

account  where  one  partner  witliholds  what  firm  is  entitled  to,  330. 
account  in  cases  of  exclusion,  339,  340. 
defendants  seeking  to  drive  plaintiff  to  dissolTc,  340t 
account  where  concern  has  failed,  341,  342. 
agreements  for  periodical  accountings,  343. 
execution  against  one  partner's  interest,  343. 
result  of  latest  cases,  343. 
specific  performance  of  agreements  between  partners,  344,  848w 
injunttions,  34o-3o0. 

Injunctions  and  receivers,  346. 

Injunction  granted  though  no  dissolution  is  sought,  346. 
Injunction  in  action  for  dissolution,  347. 
Illustrations,  347. 

Injunction  to  protect  partners  from  the  representatives  of  a  co-partner,  848. 
Injunction  to  enforce  special  agreements  between  partners,  348,  349. 
Injunction  in  case  of  misconduct,  349. 
to  restrain  holding  out,  350. 

partner  applying  for  injunction  must  come  with  clean  hands,  350. 
receivers,  appointment  of,  350  et  seq. 

principles  on  which  a  receiver  Is  appointed,  350,  351. 

necessity  of  prayer  for  dissolution,  353. 

death  or  bankruptcy  of  one  member  of  a  firm  not  a  ground  for  a  reeelTer, 

35G. 
receiver  not  appointed  unless  a  dissolution  is  sought,  357. 

exceptions  to  rule,  357. 


INDEX.  666 

[The  figures  refer  to  pages.] 

EQUITY— Continued, 

misconduct  of  partner  a  ground  for  a  receiver,  358. 
course  of  court  where  partnership  is  denied,  361. 

receiver  appointed  when  partners  have  by  agreement  divested  themselves 
of  the  right  of  winding  up,  361. 
property  of  insolvent  limited  partnership  a  trust  fund  for  creditors,  480-482. 

ESTOPPEL, 

see,  also,  "Nominal  Partnera.** 
partnership  by  holding  out,  80-87. 
liability  of  nominal  partner  in  tort,  83. 

EVIDENCE, 

of  partnership,  53-55,  31,  note  104. 

participating  in  profits  is  presumptive,  but  not  concluslye,  evidence  of  part- 
nership, 50-52,  and  notes, 
sharing  profits  only,  58-63. 
presumption  of  equality  of  partnership  shares,  138-141, 
power  of  partner  to  bind  firm  by  admissions.  220. 

EXCLUSION, 

account  in  cases  of,  839. 

EXECUTION, 

sale  of  partner's  interest  on,  141-158. 
rights  of  purchaser,  141-153. 
injunction,  152,   note  200. 
accounting  to  ascertain  interest,  343. 
effect  as  a  dissolution  of  firm,  403. 

EXECUTORS  AND  ADMINISTRATORS, 
partnership  in  office  of,  28. 

succeeding  to  share  of  deceased  partner,  stipulation  in  articles,  200. 
continuing  partnership  business,  258. 

EXPULSION, 

of  partner,  stipulation  in  articles,  208. 
right  to  expel,  401,  402. 

F 

FACT, 

partnership  a  mixed  question  of  law  and  fact,  83. 

FARMING, 

farming  partnerships,  implied  power  to  bind  firm  on  negotiaMe  ^n:per,  22S. 

FARMING  ON  SHARES, 

when  constitutes  a  partnership,  (ad. 


566  INDEX. 

[The  figures  refer  to  pr.gos.] 

FELONS, 

ojipacily  to  be  partners,  10,  11, 

FINAL  BALANCES, 

action  between  partner  for  unascertained,  thousrh   final,  balance,  315-317. 

action  at  law  between  partners  for  agreed  tiual  balance,  315-317. 
FIRM, 

see,  also,  "Name";    "Partnership." 

partnerships  between  firms,  16. 

meaning  of  term,  98. 

partnership  as  an  entity,  legal  and  mercantile  rlew,  98-101. 

FIRM  CREDITORS, 
see  "Creditors," 

FIRM  NAME, 

see,  also,  "Name." 
stipulation  in  articlre  as  to.  19B. 

FRAUD 

premiums  returnable  in  cases  of,  IS. 

in  use  of  trade  name,  110. 

in  conversion  of  i)arlin'rship  into  separate  property  or  rice  versa,  130. 

eCfect  on  priorities  in  separate  property  of  co-partner,  2\>i. 

FRAUDS,  STATUTE  OF, 

liind  purrliMsed  with  partnership  funds,  application  of  statute,  120.  note  82. 

FRAUDULENT  CONYEYANCES, 

conversion  of  firm  into  stimrate  property,  277-280. 

applying  separate  property  to  firm  debts,  287. 

rights  of  firm  creditors  in  firm  property  fraudulently  converted  Into  separat* 

property,  289. 
by  limited  partnerships.  478-480. 
liability  of  special  partner  for  concurring  in,  478. 


GAIN. 

tlie  object  of  partnership,  23>. 

GAMBLING, 

partnership  for,  illegal,  2S. 

GARNI  SHilENT, 

partner's  interest  cannot  be  reached  by,  144,  note  169. 

GENEKAL  PARTNERS, 
defined,  dS. 


INDEX.  66  i 

fTlie  fipTures  -efer  to  pages.J 

GENERAL  PARTNERSHIPS, 

see  "Partnership";    "Limited  Partnership." 

defined,   89. 

^OOD  FAITH, 

duty  of  partner  to  exercise,  160. 

right  to  ben(>fits  from  transactions  conoerning  firm  interests,  162-164. 

right  to  benefits  resulting  from  comxotiou  with   firm,   1G5. 

GOOD  WILL. 

use  of  firm  name,  108. 

of  business  is  partnership  property,   121. 

sale  of,  on  dissolution,  412,  413. 

protecting  value  of  good  will  until  sale,  412. 

GROSS  PROFITS, 

see  "Gross  Retuma." 

GROSS  RETURNS, 

distinction  between  sharing  profits  and  gross  returns,  88. 

no  presumption  of  partnership  from  sharing  of,  63-07. 

defined,  64. 

distinguished  from  profits.  64. 

"profits"  synonymous  with  "net  returns,"  64. 

GUARANTY. 

power  of  partner  to  bind  firm  by,  218. 

H 

HIGHWAY^rEN. 

partnership  between,  illegal.  26,  note. 

HOLDING  OUT, 

see,  also,  "Nominal  Partners.** 
partnership  by  estoppel,  80-87. 
liability  of  nominal  partner  in  tort.  86. 
does  not  render  one  an  actual  partner,  81.  note  229. 
injunction  to  restrain,  350. 

HUSBAND  AND  WIFE. 

persons  living  together  as,  not  partners  in  absence  of  snch  Intention,  WK 
capacity  of  married  women  to  be  partners,  10,  14. 
may  husband  and  wife  become  co-partners,  14,  15. 


^68  INDEX. 

[Hie  figures  refer  to  pages.] 

I 

ILLEGAL  PARTXERSHTPS, 

what  are,  25-29. 

smuggling,  gambling,  robbery,  theft,  etc..  25. 

between  unqualified  persons  for  carrying  on  certain  trades.  3QL 

physicians,  licenses,  27. 

between  lawyers,  license,  27. 

partnership  with  alien  enemy.  28, 

partnership  in  public  ofl3ce,  28. 

trading  in  enemy's  country,  28. 

effect  of  illegality,  29. 

members  have  no  lien,  184. 

dissolution  of  firm  by  events  rendering  business  nninwfnl.  402. 
IMPLIED  POWERS, 

■e«  "Rights  and  Liabilities";    "Powers";    "Authority";    "Partners.* 

IXOIIOATE  PARTNERSHIPS, 

In  general,  67-70. 

partnership  articles  to  be  drawn  up.  70. 

priority  of  partner  in  separate  property  of  co-partner,  204. 
INCOMING  PARTNER, 

ratification  of  previous  acts  of  co-partners,  251,  262. 

rights  and  liabilitios  of.  251-2,'56. 

assumption  of  debts.  2.'i2-2,"»0. 

when  new  member  may  join  as  plaintiff  In  action  on  firm  claims,  380. 

when  new  member  may  be  made  a  defendant,  assumption  of  debts,  SSL 

joint-stock  companies,  rights  and  liabilities,  499. 

INCOMPETENCY, 

of  partner  as  ground  for  dissolution  by  decree  of  court.  404. 
INDEMNITY, 

right  of  partner  to  indemnity  and  contribution,  171-176. 

for  loss  caused  by  failure  to  conform  to  agreement.  176. 
INDORSEMENT, 

of  bills  of  exchange,  Implied  power  of  partner.  224. 

INFANTS, 

capacity  to  b«  partners,  10,  11,  13. 

may  be  general  partner  in  limited  partnership,  429,  note   41. 
INFORMATION, 

right  of  partner  to  Information  as  to  conduct  of  business,  177. 


INDEX.  66y 

[The  figures  refer  to  pages.] 

EN  JUNCTION, 

to  restrain  sale  of  partner's  interest  on  execution,  152,  note  200. 

injunctions  and  receivers,  345. 

actions  between  partners  for,  345-350. 

Injunction  granted  though  no  dissolution  Is  sought,  343. 

in  actions  for  dissolution,  347,  348. 

to  protect  partners  from  the  representatives  of  co-partners,  348, 

to  enforce  specific  agreements  between  partners,  348,  348. 

in  cases  of  misconduct,  349. 

to  restrain  holding  out,  350. 

partner  applying  for.  must  come  with  clean  hands,  35(X 

INSANITY, 

as  ground  for  dissolution  by  decree  of  court,  401. 

INSOLVENCY, 

see  "Bankruptcy.** 
of  partnership,  rights  of  creditors,  131. 
of  firm,  actions  by  and  against  parties,  385. 
of  limited  partnerships,  477  et  seq. 
what  constitutes,  477. 
fraudulent  conveyances,  480. 

liability  of  special  partner  concurring  In,  478. 
property  a  trust  fund  for  creditors.  480-482. 

when  trust  begins,  482. 
assignments  for  benefit  of  creditors,  483,  484. 
special  partner  as  a  creditor,  484  et  seq. 

meaning  of  "insolvency"  in  statutes  relating  to  special  panner  as  a  cred- 
itor. 484. 
application  of  statute,  485. 

INSPECTION, 

of  accounts,  right  to  inspect,  178,  179. 

INSURANCE, 

power  of  partner  to  insure  firm  property,  220. 

limited  partnerships  cannot  usually  engage  in.  423.  428. 

states  in  which  limited  partnerships  may  engage  in,  427. 

INTENTION, 

to  be  partners,  what  constitutes  a  partnership,  30-73. 
of  parties  decisive  of  question  of  partnership,  30. 
to  be  partners  a  mixed  question  of  law  and  fact,  33. 
tests  of  intention.  53-67. 


570  INbE.X 

(The  figures  refer  .o  oages.] 

INTEREST. 

shariug  profitB.  asnry.  partnership,  34.  35. 
share  of  prDfits  as  interest.  43,  uote  134. 
right  to  interest  on  balances,   ltj8-171. 

INTERFERENCE. 

effect  of  Interference  by  special  partner.  472  et  seq. 

exceptions  to  rule,  475,  470. 

operateti  as  dissolution  in  sense  of  termination  of  limited  liability,  498L 

J 

JOINDER, 

claims  arising  ex  contractn,  362  et  seq. 
of  nominal  partners  in  nt-tion  on  firm  claims.  S^w?.  384, 
contracts  in  firm  name.  ncUi.  3<*»4. 

of  flormnnt  partner  in  action  on  firm  claims.  .'?<'ui.  .*^(>4. 
of  partners  in  action  on  contract  in  name  of  partner,  SGTi  370. 
when  partner  must  sue  alone,  3(>G. 
negotiatile  instrnmeuts,  3t><i. 
contract  with  partner  alone,  3fi7. 
when  partner  may  sue  either  alone  or  jointly  with  oo-pnrtner,  368L 
recovery  of  money  paid  under  frnud  or  mistalc*-.  3ijii. 
firm  as  an  nn(lisi'lr>sed  princi[ial.  liGQ. 
reason  and   limitation  of   rule,  309. 
dormant  and  nominal  partner,  370. 
of  partners  in  action  arising  ex  delicto.  371,  372,  378L 
of  partners  in  action  on  firm  liability,  .372  et  seq. 
liability  arising  ex  contract u,  372  et  seq. 
exceptions  to  rule.  372  et  seq. 
dormant  partners,  374. 
nominal  partners,  37.">. 

when  agent  partner  must  be  sued  alone,  deeds.  .375. 
negotiable  instruments,  376. 
credit  giv<'n  exclusively  to  agent  partner.  375. 
when  partner  may  he  sued  alone  or  jointly  with  co-partn«T.  378k 
as  an  undisclosed   principal.  377. 
of  i)artners.  efifect  of  changes  in  firm.  378  et  seq. 
ndinission  of  new  mpnil>er,  effect,  379. 
when  incoming  partner  may  join  as  plaintiff,  380. 

when  new  member  may  be  made  a  defendant,  assumption  of  debts.  381. 
retiiemeut  of  olil  member.  381-<i.Sl. 
death  of  member,  action  against  smvivurs,  oti4. 
bankruptcy  and  insolveucy,  385,  38U. 


INDEX.  671 

[The  figures  refer  to  pages.] 

JOINDER— CJontinued, 

disqualificatiuii  ul  one  partDcr  to  sue,  effect,  387-^'JL 
action  in  firm  name,  392. 

JOINT  AND  SEVERAL  LIABIUTY, 

of   partners,   contract.^.  24."). 

relt"ase  of  one  partner,  246. 

covenant  not  to  sue.  240. 

Judgment  against   one  partner,   34T. 

by  statute,  247. 

torts,  247. 

distinction  between  torts  and   breaches  of  contract.  2+8. 

JOINT  ESTATES. 

estates  in  partnership,  132-1. "<i. 

partners  not  joint  tenants  of  firm  property,   135-137. 

JOINT  OWNERS. 

meaning  of  phrase,  2,  note  2. 

JOINT-STOCK  COMPANIES, 
defined,  90,  498. 

are  associations  intermediate  between  partnerships  and  corporations,  498. 
transfer  of  shares,  154.  498. 
no  delectus  personarum,  75. 
powers  of  members  and  officers,  499. 
rights  and  liabilities  of  members  inter  se,  500. 

nuMuber  not  entitled  to  compensation   in  absence  of  agreement,   WX). 
liability  of  members  to  third  jx^rsoni,  501. 
actions  by  and   against  joint-stock   companies,   502. 
dissolution  of,  5<»3. 

JOINT  TENANTS, 

see  "Co-ownership.'* 
partners  are  not,  of  joint  property,  135-137. 

JUDGMENT, 

power  of  partner  to  confess  judgment,  217. 

against  one  partner  on  partnership  contract,  effect,  247. 

discharge  of  partnership  debt,  merger  in  judgment,  272. 

JURISDICTION. 

equitable  actions  between  partners  in  general,  325  et  se<j. 
ailequate  reme<ly  at  law,  32&. 

JURY. 

province  of,  see  "Court  and  Jury." 


^72  INDEX. 

[The  figures  refer  to  pages-J 

L 

LACHES, 

effect  of,  on  action  In  equity  between  partners,  Z28, 

a  bar  to  relief  in  equity,  328. 

as  a  defense  to  suit  for  an  account,  328. 

acquiescence  in  account,  328. 

in  enforcing  agreements  for  partnerships,  .329, 

where  partnership  is  a  mining  partnership,  330, 

effect  of  evidence  of  an  abandonment,  331. 
LANDLORD  AND  TENANT, 

farming  on  shares,  when  a  partnership,  6d. 
LANDS, 

partnerships  in,  statute  of  frauds,  21. 

conveyance  of,  in  firm  name,  112. 

when  deemed  partnership  property,  120,  note  82. 

title  to,  128,  127. 

when  partnership  realty  deemed  personalty,  127-12» 
LAUNCHING, 

limited  partnerships  before  compliance  with  statutory  requirements,  effect  •■  to 
third  persons,  459. 

no  partnership  until  launched,  67-70. 
LAW, 

partnership  never  created  by  operation  of,  9, 

partnership  a  mixed  question  of  law  and  fact,  33. 
LAWYERS. 

partnership  with  unlicensed  person,  validity,  27. 
LEASES, 

power  of  partner  to  lease  realty,  218. 
LEGACY. 

to  firm,  to  whom  payable,  103. 

LIABILITIES, 

see  "Rights  and  Liabilities." 

LIENS, 

on  property  contributed  to  capital,  114. 
creditors  have  no  lien  on  partnership  property,  128. 
subrogation  of  creditor  to  partner's  lien,  129,  130. 
partner's  lien,  130,  179-184. 

foundation  of  partner's  lien,  180. 

consequences  of  the  lien,  180. 


INDEX.  673 

[The  figure':?  refer  to  pages.] 

LI  ENS— Continued, 

to  what  property  it  attaches,  181. 

no  lien  on  partner's  share  for  ordinary  debts  due  from  him  to  firm,  18Z. 

partnerehip  property  appropriated  to  private  uses,  182. 

exists  as  against  all  persons  claiming  a  share  in  the  assets,  182. 

loss  of,  183. 

no  lien  if  partnership  is  illegal,  184. 

exists  only  on  partnership  assets,  184. 

rights  in  firm  and  separate  property,  273-297. 
of  co-owners,  184. 

creditors  have  no  lien  unless  expressly  created,  273. 
separate  creditors  subordinate  to  partner's  lien,  283. 
subrogation  of  separate  creditors  to  partner's  lien,  284. 

LIMITATIONS,  STATUTE  OF, 

resulting  trusts,  property  purchased  with  partnership  funds,  12Bu 

LIMITED  PARTNEIiSHIP, 
defined,  90,  418. 
in  general,  417  et  seq. 
general  nature,  418. 

special,  limited,  and  particular  partnershipe  distinguished,  418. 
special  partner  defined,  418. 
general  partner  defined,  418. 
origin  and  purpose  of  limited  partnerships,  419. 
must  be  authorized  by  statute,  421. 
essentials  of  ordinary  partnership  must  exist,  421. 
theory  of  the  statutes,  421. 
establishment  of  relation,  421—455. 

construction  of  the  statutes,  422,  423. 
purposes  for  which  they  may  be  formed,  423  et  seq, 
authorized  businesses,  424. 
prohibited  businesses,  426. 

effect  of  engaging  in  unauthorized  business,  427. 
becomes  a  general  partnership,  427. 
contracts  not  invalid,  427. 
conflict  of  laws,  427. 

members,  general  and  special,  4z8  et  seq. 
must  consist  of  both  general  and  special  partners,  428. 
certificate,  429  et  seq. 

facts  required  to  be  stated  in  certificate,  429-431. 
acknowledgment  and  proof  of  certificate,  432  et  seq. 
record  of  certificate,  433-435. 
publication  of  certificate,  435  et  seq. 


574  INDEX. 

[The  figures  refer  to  p.iffe8.J 

LIMITED  PARTNERSHIP— Continued. 

time  of  publication  of  cortificate,  43d. 

proof  of  publication,  44<). 
affldarit,  441. 

what  affidavit  must  state.  441. 
contributions  of  general  and  special  partnerB,  442  et  seq. 
firm   name,  445  et  seq. 

firm  name  a  necessity,  445  et  seq. 

statutory  provisions  as  to  firm  name,  445  et  seq. 

penalty  for  use  of  unauthorized  or  forbidden  name.  445  et  seq. 
firm  sign,  449. 

what  sign  must  contain,  449. 
when  partnership  begins.  450  et  seq. 

begins  only  when  certificate  is  made,  acknowledged,  and  recorded,  and 
affidavit  filed   wliere  reciuired,  450. 

penalty  for  false  statement  in  certificate  or  affidavit,  450  et  seq. 

falsi-  statement  in  certificate  or  affidavit  renders  all  partnera  liabl*  as 
general   partners,  450. 
renewals.  4ri'_'  et  seq. 
rights  and  liabilities,  455  et  seq. 
liability   for  debts,   456. 

liability  of  general  partnera  for  debts.  45<J. 

liability  of  special  partners  for  debts.  456. 
defective  or  delayetl   formation.  4.58  et  seq. 

effect  inter  se.  458. 

effect  as  to  third  |)ersons.  459  et  seq. 

notice  where  organization  is  completed  subsequent  to  laancbing,  409. 

4<;(). 

rights  in  firm  proi)erty,  4G1,  462. 
withdrawal  »)!'  jnofits  or  capital,  463  et  MQ. 

what  is  a  witlnlrawal,  4(>4. 

penalty  for  withdrawal,  4()3,  466. 

remedy  for  withdrawal,  467. 
alteration,  468  et  seq. 

dissolution  by  alteration,  468  et  seq. 

penalty  for  alteration,  468  et  seq. 

what  constitutes  alteration.  470,  471. 

special  partner  must  participate  in  alteration,  471. 

consequences  of  alteration  not  retroactive,  472. 
Interference.  472  et  seq. 

exceptions  to  rule  as  to  interference,  475,  478. 
insolvency,  477  et  seq. 

what  constitutes  insolvency,  477. 


[The  figures  refer  to  pages.l 

LIMITED  PARTNERSHIP— Ck)utinued. 

fraudulent  conveyances,  47S— 480. 

liability  of  special  partner  concurring  in,  478. 
property  a  trust  fund  for  creditors,  4S()-482. 

when  trust  begins,  482. 
assignments  for  benefit  of  creditors,  48o,  484. 
special  partner  as  a  creditor,  484  et  seq. 

meaning  of  "insolvency"  in  statutes   relating  to  spedaJ  partner  a 

a  creditor,  484. 
application  of  statute,  48.5. 
termination  of  relation,  dissolution,  487  et  seq. 
termination  of  future  liability,  487. 
notice  of  dissolution  by  operation  of  law,  487. 
bankruptcy  and  insolvency,  488. 
abandonment,  488. 
death,  488. 

by  operation  of  law,  489. 
judicial  decree,  489. 
conveyance  of  one  partner's  interest,  488. 

statutory  provisions,  490. 
by  act  of  parties,  491-493. 
change  from  limited  to  general  liability.  493. 
withdrawal,  alteration,  or  interference,  493. 
actions  between  members,  493,  494. 
actions  between  firm  and  third  persons.  494  et  seq. 
actions  must  be  brought  by  and  against  general  partners  only,  494. 

LIQUIDATED  DAMAGES, 
stipulation  in  articles,  210. 

LOAN, 

in  consideration  of  share  of  profits,  43—49,  and  notes. 

advances  by  partner.  117. 

power  of  partner  to  borrow  money,  221. 

LOSSES, 

sharing  of  profits  and  losses  as  a  test  of  partnership,  65-67. 
effect  of  stipulation  against  community  of  losg,  62. 
impairing  capital,  rights  of  partners,  116,  117. 

LOTT'ERIES, 

legality  of  partnership  in  lotteries,  25. 

LUNATICS, 

capacity  to  be  partners,  10,  14. 


576  INDEX. 

[The  figures  refer  to  pagei.] 

M 

MAJORITY, 

rights  and  powers  of,  158.  159. 

right  to  change  nature  of  business,  158,  15J». 

right  to  determine  time  to  divide  profits,  184. 

right  to  determine  quantum  of  profits  to  be  divided,  184. 

acts  of,  in  respect  of  changes  in  articles,  194. 

decision  of  differences  between  partners,  stipulation  In  articles,  20S. 

MANAGEMENT, 

right  of  partner  to  participate  in,  157,  158. 

of  business  right  of  partner  to  information  om  to,  177. 

MARRIAGE, 

dissolution  of  partnership,  257. 

of  a  feme  sole  partner,  a  ground  of  dissolutioD  ■abject  to  stiptilation,  401. 

MARRIED  WOMEN, 

capnclty  to  be  partners,  10,   14. 

may  husband  and  wife  become  co-partnera,  14,  15. 

MARSHALING   ASSETS, 

firm  and  separate  creditors,  20S. 

MASTER  AND  SERVANT. 

sharing  of  profits  in  lieu  of  salary,  partnership,  80. 
share  of  profits  as  compensation  for  servicea,  43,  note  lS4k 

MERCHANTS, 

mercantile  view  of  partnership.  98-104. 

MERGER, 

discharge  of  partnership  debta  by,  271,  272. 

MINING, 

limited  partnership  may  engage  in,  42Qw 

MINING  PARTNERSHIPS, 
no  delectus  personarum,  75. 
defined  and  explained,  92. 
transfer  of  shares,  154. 

implied  power  of  partner  to  bind  firm  by  negotiable  paper,  22S. 
laches  as  a  defense  to  action  for  an  account,  330. 

MISCONDUCT, 

of  partner  a  ground  for  a  receiver,  358-361. 

of  a  partner  ground  for  dissolution  by  judicial  decree,  404. 

degree  of  misconduct,  405. 

on  part  of  partner  seeking  dissolution,  408. 


INDEX.  677 

[The  figrures  refer  to  pages.) 

MONEY. 

wrougfully  disposed  of  by  one  partner,  rights  of  oo-partners,  801- 

MONOPOLY, 

partnership  illegal  as  tending  to  create,  28,  note  97. 

MORTGAGES, 

power  of  partner  to  mortgage  chattels.  218. 

power  of  partner  to  mortgage  firm's  real  estate.  218. 

mortgage  of  personal  property,  22!  •. 

implied  power  of  partner  to  mortgage  tirm  property,  229. 

mortgage  of  real  property,  230. 

MUTUAL  AGENCY, 

as  a  test  of  partnership,  49,  50. 

N 

.NAJME, 

use  of  one's  name  a  sufBcient  considerntion  for  partnership,  17,  note  4ft. 

partnership  name.  105-112. 

necessity  of  firm  name,  105. 

in  what  name  firm  may  be  bound,  10.">.  UifJ. 

what  name  may  be  u.^^ed,  107. 

right  to  trade  in  one's  own  name,  107,  108. 

use  of  sutBx  "&  Co.,"  108. 

good  will  of  trade  name,  108. 

use  of  unauthorized  name,  108. 

use  of  corporate  name,   109. 

exclusive  right  to  name.  110. 

property  in  one's  own  name.  110. 

exclusive  right  to  name,  110. 

no  trade  name  without  actual  business.  111. 

corporation  infringing  trade  name.  111. 

remedy.  111. 
what  may  be  done  in  firm  name.  Ill,  112. 
conveyances  of  real  property  in  firm  name.  112. 
title  to  real  estate,  in  wliose  name  held,  12<i,  127. 
partnership  name,  stipulation  in  articles,  199. 
action  in  firm  name.  101,  112,  392. 
firm  name,  good  will,  etc.,  412,  413. 
firm   name  of  limited  partnership.  445  et  seq. 
statutory  provisions,  445  et  seq. 

NECESSITY, 

the  limit  of  a  partner's  authority  to  bind  firm,  215,  21tt. 
(JEO.PART.— 37 


578  INDEX 

[The  figures  refer  to  pages.] 

NEGLIGENCE, 

partner's  duty  to  exercise  care  and  skill,  160. 

DO  action  at  law  lies  between  partners  for  neglect  of  firm  bnslneBS,  834. 

NEGOTIABLE  INSTRUMENTS, 

in^plied  power  of  partner  to  bind  firm  on,  224-228. 

Implied  power  of  partners,  trading  and  nontrading  firms.  224-228. 

partner's  implied  power  to  tninsfer,  233. 

liability  of  partners  on.  238,  239. 

in  name  of  one  partner,  action  on,  3G6. 

liability  of  partners  on,  exclusively  in  name  of  one  partner,  37^ 

bona  fide  holders,  22(>-22S, 

NET  PROFITS, 

see  "Gross  Returns";    "Profita." 

NOMINAL  PARTNERS, 
defined,  96. 

partnership  by  estoppel,  holding  out,  80-87. 
Talidity  of  transfer  of  firm  assets  by.  82.  note  229. 
Joinder  in  action  on  contract  made  in  f5rm  name,  82,  note  229. 
liability  dependent  on  estoppel,  84. 
liability  for  tort  of  actual  partner,  85. 
right  to  have  firm  as.set8  applied  to  firm  debta,  275. 
when  necessary  or  proper  parties,  364. 

as  parties  in  action  on  contract  in  name  of  one  partner.  'MO. 
Joinder  in  actions  on  firm  liability  arising  ex  contractu,  375. 

NONTRADING  PARTNERSHIPS, 
■ee  '"Trading  Pnrtnorships." 

NOTICE, 

Implied  power  of  partner  to  receive  notice,  234. 
of  retirement  or  dissolution,  259-201,  407,  4U. 

liability  for  failure  to  give,  83. 

who  entitled  to  notice,  :S)9-261. 

what  is  actual  notice,  262,  263. 

necessity  of,  dormant  partners,  264. 

by  publication,  nondealers,  264. 
to  third  persons  where  organization  as  limited  partnership  is  perfected  snbw 

quent  to  launching,  459.  460. 
of  dissolution  of  limited  partnership,  by  operation  of  law,  487. 

conveyance  of  one  partner's  interest,  487. 

record  and  publication  of  notice  of  dissolution,  491. 

by  act  of  parties.  491—493. 
of  retirement  of  member  of  joint-stock  company,  499. 


INDEX.  679 

[The  figures  refer  to  pages.] 


NOVATION, 

discharge  of  retired  partner  by,  269-271. 
joinder  of  incoming  partner  in  action  on  tirm  claim,  380t 
action  against  new  firm  on  debts  of  old,  381. 
retirement  of  old  member,  rights  of  new  Qrm,  382. 

0 

OFFICE31S, 

of  joint-stock  companies,  powers,  499. 

OPERATION  OF  LAW, 

partnership  never  created  by,  8, 
dissolution  by,  257. 

OSTENSIBLE  PARTNERS, 
defined,  93. 

OVERDRAFTS, 
interest  on,  168. 

OWNERSHIP, 

see  "Co-ownership.** 
of  profits,  the  ultimate  test  of  partnership,  50-S2. 


P 

PARTICULAR  PARTNERSHIPS, 
see  "Limited  Partnership." 
defined,  89. 
special,  limited,  and  particular  partnerships  distinguished,  418. 

PARTIES, 

to  action  on  firm  claim,  362-372. 
claims  arising  ex  contractu,  363. 
contracts  in  firm  name,  363. 

dormant  partners  proper,  but  not  necessary,  parties,  363. 
nominal  partners,  when  proper  or  necessary  parties,  364. 
nominal  partners,  when  necessary  or  proper  parties,  364, 
contracts  in  name  of  partner,  365. 
exceptions  to  rule,  365. 
when  partners  must  sue  alone,  868. 
sealed  instruments,  366. 
contract  of  partner  alone,  368. 
when  partner  may  sue  either  alone  or  jointly  with  eo-partner,  868. 
as  an  undisclosed  principal,  o68. 
recovery  of  money  paid  under  fraud  or  mistake,  369. 


580  INDEX. 

[The  figures  refer  to  i>:ige3.J 

PARTIES— Continued, 

retiiion   and   limitation    of   rule,   369. 
dormant  and  nominal  partners,  '670, 
claims  arising  ex  delicto.  371,  372. 
to  action  on  firm  liability.  372. 

liabilities  arising  ex  contractu,  372. 
exceptions  to  rule.  372. 
dormant  partners,  374. 
nominal  partners.  37.">. 

when  agent-partner  must  be  sued  alone,  dopda.  375. 
negotiable  instruments,  370. 
credit  given  e.xclusively  to  agent-partner.  37(i. 
when  partner  may  be  sued  alone  or  jointly  with  co-partner«.  376- 
lirm  as  an  uniiisclosid  principal,  377. 
li.-ihilities  arising  ex  delicto.  378. 
effect  of  changes  in  firm,  378  et  seq. 

assignment  of  claims  to  new  firm.  380. 
novation,  380. 

admission  of  new  member,  effect,  381. 
when  incoming,'  partner  may  join  as  plninfifT,  380. 

when  new  member  may  l>e  made  a  defendant,  assumption  of  debts.  381. 
retirement  of  old  member,  381-1^84. 

actions  by  and  against  new  firm  after  retirement  of  old   member,  381-384 
death  of  member,  actions  agniiist  surviving  partners.  384. 
bankruptcy  and   insolvency.  385.  38(5. 
disqualification  of  one  parint-r  to  sue,  effect,  387-3i>l. 
action  in  firm  name,  392. 

actions  between   limited   partm-rships  and  third  persons.  41)4. 
when  spi'cial  partut-r  is  a  necessary  party  in  suits  in  rolatiou  to  limited  part- 
nerships, 497. 

PARTITION, 

no  action   for,  between  partners,  before  adjustment  of  acoouuts.  3(>1.   note  3. 

PARTNERS. 

see,   also,   "Limited   Partnerships";     "Partnership";     "Profits";     "Sbariog 
Profits." 
members  of  joint-stock  companies,  see  "Joint-Stock  Companies." 
as  to  third  persons.  3. 
who  are,  contract  of.   pjirtuership,  9. 
coni!)etency  of  persons  to  be,  10-17. 

aliens,  11. 

felons,  11. 

infants,  14. 


INDEX.  681 

[The  figures  refer  to  pages.] 

PARTNERS— CJontinued, 

married  womMi,  14. 

lunatics,  14. 

corporations,  15. 

number  of  persons  who  may  become  members  of  one  partnership,  13. 
Intention  to  be,  what  constitutes  a  partnership,  30-73, 
who  are,  development  of  modem  doctrine,  34-52. 

Grace  v.  Smith,  34. 

Waugh  V.  Carver,  35. 

Cox  V.  Hickman,  37-52. 

distinction  bet%\  (mmi  sharing  profits  and  gross  returns,  38. 

payments  varying  with  profits,  36. 

as  to  third  persons,  doctrine  abandoned  by  Cox  v.  Hickman,  3S. 

states  following  doctrine  of  Cox  v.  Hickman,  43,  note  134. 

Bovil's   Act,   43-49. 

doctrine  in  New  York,  46,  note  135. 

mutual  agency  as  a  test  of  partnership,  49,  50. 

ownership  of  pro6t3,  the  ultimate  test  of  partnership,  50-52. 

tests  of  intention  to  be,  53-67. 

agreements  to  share  both  profits  and  losses,  55-57. 

agreements  to  share  profits  only,  58. 

sharing  profits  only,  02,  63. 

stipulations  against  community  of  loss,  62,  63. 

sharing  gross  returns,  63-67. 
contemplated  partnerships,  67-70. 

partnership  articles  to  be  drawn  up,  70. 
promoters   of  corporations,   70,   71. 
defective  corporations,  liability  of  stockholders,  71-73. 

members  of  corporation  doing  business  after  expiration  of  charter,  78 
delectus  personarum,  74,  75. 
specific  performance  of  an  agreement  for  a  pirtnorship,  75-79. 

general  rule  against  specific  performance  of  agreements  for,  76. 

cases  in  which  a  decree  will  be  made,  76-78. 

specific  perform;iiice  where   account  only   is   wanted,   78. 
•nbpartnerships,  79,  SO. 
classification  of  partners,  93. 

general   partners,    93. 

special  partners,  93. 

ostensible  partners,  93. 

secret  partners,  94. 

silent  partners,  95. 

dormanf  partners,  95. 


582  INDEX 

IThe  figures  refer  to  pat?c-3.J 

PARTXEKS— Continued, 

nominal  partners,  96. 
rights  in  firm  capital.  114,  115. 

losses  impairing  capital,   116,  117. 
advances  by,  117. 

what  rights  a  creditor  has  in  firm  property,  129. 
what  rights  a  partner  has  in  firm  property,  129. 
conversion  of  partnership  or  separate  property,    130. 

what  amounts  to  fraud  in  connection  with  such  transfer,   130. 
preferences  iiniong  creditors  not   necessarily  evidence  of  fraud,   ISl. 
no  formal  instrument  essential  to  the  conversion,  132. 
not  tenants  in  common  of  firm  property,  133-135. 
not  joint  tenants  of  firm  property,  135. 
amount  of  each  partner's  share,   13S-141. 
sale  of  interest  of,  on  execution,  141-153. 
Implied  rights  and  liabilities  inter  sc   1.")T-1S7. 
rights  to  participate  in  management,  157,  ISSL 
rights  and  powers  of  majority,  I.jS,  !.">!). 
duty  to  observe  good   faith,   160. 
duty  to  exercise  care  and  skill,  160. 

right  to  benefits  from  transactions  concernin;:  firm  interestR,  162-164. 
right  to  compete  with  firm,  lt54. 

right  to  benefits  resulting  from  connection  with  firm,  165. 
right  to  compensation  for  services,  16.5-108. 
right  to  interest  on  balances,  168-171. 
right  to  indemnity  and  contribution,  171-176. 
limit  as  to  amount  of  contribution,  174. 
advances  not  considered  voluntary  payment,  174. 
right  to  contribution  when  the  outlay  concerns  an   illegal   act,   174. 
ri;:ht  to  contribution  where  partner  has  alone  becoine  bi.'ind,   175. 
right  to,  when  loss  was  due  to  partner's  own  default,  176. 
when  is  the  right  to  oontributiun  enforceable,  176. 
ratification  of  unauthorized  act,   176. 
duty  to  conform  to  agreement,  176,  177. 
right  to  information  as  to  conduct  of  business,  177. 
duty  to  keep  and  right  to  inspect  accounts,  178,  179. 

effect  of  keeping  no  hooks  or  of  destroying  them,  179. 
partner's   lien,    179-184. 

right  to  have  partnership  property  applied  to  partnership  debts,  179-184 

foundation  of  partner's  lien,  180. 

consequences  of  the  lien,  ISO. 

lien  exists  only  on  partnership  assets,  181. 


INDEX.  68t3 

[The  figures  refe''  to  pages.] 

PARTN  ERS— Continued, 

to  what  property  a  lien  attaches,  181. 

no  lien  on  a  partner's  share  for  ordinary  debts  due  from  him  to  flrn' 

182. 
partnership  property  appropriated  to  private  uses,  182. 
lien  exists  as  against  all  persons  claiming  a  share  in  asseta,  182. 
loss  of  lien,  183. 
lien  of  co-owners,  184. 
no  lien  if  partnership  is  illegal,  184. 
dlTision  of  profits,  184-187. 

right  of  majority  to  determine  time  of  division  of  profits,  184,  185. 
right  of  majority  to  determine  amount  to  be  divided.  184,  185. 
what  is  divisible  as  profits,  185. 
times,  etc.,  of  division,  185. 

cases  where  dividends  have  been  held  not  improper,  187. 
exclusion  from  share  of  profits,  187. 
articles  of  partnership,  rights  and  liabilities  under,   lSS-210. 
new  partners,  how  affected  by  changes  in  articles,  194. 
rights  in  firm  property,  203. 
rights  and  liabilities  as  to  third  persons,  211. 
power  of  partner  to  bind  firm,  211-235. 

power  to  bind  firm  determined  by  principles  of  agency,  212,  235. 
express  authority,  212,  213. 
implied  authority  to  bind  firm,  213-216. 
necessity  the  limit  of  authority,  215,  216. 
particular  implied  powers,  210-221. 

acts  not  within  a  partner's  implied  powers,  217,  218. 
acts  within  a  partner's  implied  powers,  218-221. 
powers  of  partner  in  trading  partnerships,  221. 
implied  power  to  execute  sealed  instruments,  222-224. 
implied  power  to  bind  firm  on  negotiable  instruments,  224-228. 
Implied  power  to  borrow,  228,  229. 
power  to  mortgage,  229,  230. 

implied  power  to  bind  firm  by  simple  contracts,  230,  231. 
buying  and  selling,  231-234. 
to  receive  notice,  234. 
liabilities  of  partners  to  third  persons,  235-245. 

liabilities  to  third  persons  determined  on  general  principles  of  agency, 

235. 
liability  in  contract,  236. 
restrictions  by  dissent,  236,  237. 
form  of  contract,  237-242. 
■ealed  instruments,  238. 


^^4  INDEX. 

[The  figures  refer  to  paKt-s-J 

PA  RTNERS— Continoed, 

negotiable  instrumeuta,  238. 

Bimple  contracts,  239. 

firm  benefited  by  partner's  contract,  239. 

money  borroweil  by  one  partner,  240. 

misappropriation  of  trust  fund.  241. 

gooils  supplied  one  partner,  241. 

equitable  doctrine  in  these  cases,  241   243. 

liabilities  in  tort,  242-245. 

contracts,  24r).  , 

joint  and  several  liability.  245-249. 

covenant  not  to  suo,  24H. 

release  of  one  part  nor,  24G. 

tort;?,  247. 

judgment  against  one  partner,  247. 

joint  and  several  liability  by  statute,  247. 

distiuction  between  torts  and  breaches  of  contract,  248^ 

breaches  of  trust.s.  24S. 
extent  of  liability,  24lt. 
beginning  of  liability,  250-25(5. 

liability  before  execution  of  articles.  250. 
no  liability  before  firm  is  formed,  2.50. 
liability  for  acts  of  one  not  yet  a  partner,  25L 
Incoming  partners,  251-25(5. 

assumption  of  debts.  252-256. 
termination  of  liability,   2.57-273. 
future  acts,  257-205. 

dissolution  by  operation  of  law,  257, 

effect  of  dwith,  257. 

executors  continuing  business,  258. 

dissolution  by  acts  of  partners,  250-201. 

who  entitled  to  actual  notice  of  dissolution  or  retirement  250-281. 

what  is  actual  notice,  202,  2G;i. 

notice  by  publication,  nnndialers,  204. 

dormant  partners,  necessity  of  notice  of  retirement,  2(J4. 
jMiBt    acts,    205-273. 

payment  by  one  partner,  205. 

payment  by  new  firm,  2('A>. 

application  of   payments,   2G6-26a. 

release  of  one  partner,  208. 

novation,  2GO-271. 

merger,  271. 

deceased  partners,  272,  273, 


INDEX.  685 

fThe  figures  refer  to  pajresj 

FA  RTNERS— Continued. 

rights  in  firm  and  separate  property,  273-U97. 

rights  of  firm  creditors  in  firm  property,  274-280. 

nominal  partner  no  actual  firm,  275. 

dormant  partners  no  ostensible  firm.  276. 

joint,  but  not  firm,  debt,  276. 

conversion  of  firm  into  separate  property,  277-280. 
l>artners  in  firm  property,  280  et  seq. 

exceptions  to  rule,  280. 

cannot  prove  in  competition  with  creditors  of  bankrupt  firm,  2S0. 

rights  where  separate  property  has  been  fraudulently  couverted  to  us*- 
of  firm,  282. 

distinct  trades,  283. 

discharjie  in  bankruptcy.  283. 
rights  of  separate  creditors  in  firm  property,  2S:i.  284. 
rights  of  separate  creditors  in  separate  property.  2^i5~287, 
rights  of  firm  creditors  in  separate  property,  287-203. 

exceptions  to  rule  no  joint  estate,  288. 

frauds,  289. 

distinct  trades,  2i)0. 

firm  creditors  petitioning,  2i)l. 

government  a  firm  creditor,  292. 

legal  priorities  previously  acquired.   292. 

marshaling  assets,  firm  and  sejiarate  creditors,  2'.>3. 
rights  of  partners  in  separate  property  of  co-partner,  li'.).''.  296. 

fraud,  distinct  trades,  inchoate  partnerships,  294. 

where  separate  estate  of  co-partner  is  insolvent,  293-296. 

rights  in  separate  property  of  co-partner  where  there  are  no  joint  debts. 
295. 
rights  of  joint  and  separate  creditors  in  firm   aii.l  scjiarate  properly,  2VX), 
297. 
*ctIon«  between,  298-361. 

action  on  partnership  claim  or  liability  at  law.  298  et  seq. 

against  co-partner  on  obligation  from  firm.  29S  et  seq. 

obligation  to  firm,  298  et  seq. 

reason   why  no   action   at   law   lies  against   co-partner  on   partnership 
claim  or  liability,  299. 

exceptions  to  rule  that  no  action  at  law  lies  between  partners,  304-308. 

Massachusetts  rule,  305. 

final,  though  unascertained,  balance,  305. 

partnership  in  single  transaction,  307. 

single  unadjusted  items,  308. 
actions  between,  under  the  Code,  308,  309. 


686      ,  INDEX. 

[The  figures  refer  to  pages.] 

PARTN  ERS— Continued. 

actions  between  flrma  with  a  common  member,  309-314. 
action  at  law  on  individual  obligation.  314-325. 
claims  not  connected  with  partnenihip.  315. 
claims  for  agreed  final  balances,  31.V31T. 
express  contracts  between  partners,  317-321. 

illustrations,  318-321. 
action  at  law  between  partners  for  losses  caused  by  partner's  wronc. 
322x^25. 
actions  between,  in  equity,  304-308. 

equitable  actions  in  general,  325  et  siq. 

equitable  jurisdiction,  325. 

genera!  rules  as  to  equitable  iuterfirence  between  partners.  326,  326l 

necessity  of  praying  for  dissolution,  320.  327. 

modern  rule,  327. 
noninterference  in  matter  of  internal  regulation,  327,  323. 
effect  of  laches,  328-.*i32. 

laches  a  bar  to  relief  in  equity,  328. 
laches  a  b«ar  to  a  suit  for  an  account,    328. 
acquiescence  in  account,  328. 

laches  in  enforcing  agreements  for  partnerships,  329. 
laches  where  partnership  is  a  mining  partnerbhip,  330l 
effect  of  evidence  of  abandonment.  331. 
accounting   uud   dissolution.  3.'j2    ct   stq. 

and    see   "Accounting." 
•ipeiific  performance  of  agreements  between,  344,  IMS. 
actiuuh  between  partners  and  third  persons,  3(J2  et  seq. 
and  see  "Actions." 
parties  to  action  on  firm  claim,  3G2. 
claims  arising  ex  contractu,  3(33. 
contracts  in  firm   name,   363. 
exceptions,  3G3. 

dormant  partners,  when  proper,  but  not  necessary,  parties,  88& 
nominal  partners,  3&4. 
contracts  in  name  of  partner,  36Qb 
exceptions  to  rule,  365. 
parties  to  action  on  firm  liability,  372. 
liabilities  arising  ex  contractu,  372. 

exceptions  to  rule,  372. 
liabilities  arising  ex  delicto,  378. 
effect  of  changes  in  form,  378. 

admission  of  new  member,  379. 
retirement  of  old   member,   381-384. 


INDEX.  ^^'^ 

[The  figures  refer  to  pages.! 

PARTNERS— Continued, 

death  of  member,  action  against  surrivors,  3Si. 

bankruptcy  and  insolvency,  385,  3SG. 
disqualification  of  one  partner  to  sue,  effect,  387-391, 
action  in  firm  name,  392. 
consequences  of  dissolution  as  to,  408  et  seq. 
winding  up  businesjj,  408— ilO. 
notice  of  dissolution,  411. 
sale  of  good  will,  412.  413. 
payment  of  firm  debts,  413. 
general  and  special  members  of  limited  partnerships,  428. 
general  partner  defined,  418. 
special  partner  defined,  418. 
contribution  of  general  and    special  partners,  442  et  seq. 

general  partner  need  make  no  couli  ibutiou.  44"J. 

jpecial  partner  must  usually  contribute  cash,  442. 

special  partners  in  few  states  may  contribute  property,  442. 
liability  of  general  partners  for  debts  of  limited  partnerships,  456. 
liability  of  special  partners  for  debts  of  limited  partnerships,  450. 
special  partner,  rights  in  firm  property,  461,  402. 

special  partners  must  participate  iu  alteration  to  be  held  liable,  471. 
special  partner  liable  as  general  partner  where  he  interferes.  472  et  seq. 
special  partner,   liability  for  concurring  in   fraudulent  couvivaiices,   478. 
right  of  general  partner  to  make  assignment  for  benefit  of  creditors,  483. 

484. 
special  partner  as  a  creditor,  484  et  seq. 

application  of  statute,  485. 
general  and  special  partners,  termination  of  relation,  487  et  seq. 
members  of  joint-stock  companies,  powers,  499. 
liability  to  third  persons,  501. 

PARTNERSHIPS, 

see,   also,   "Joint-Stock  Companies";    "Limited   Partnerships";    "Name"; 
"Partnership  Shares." 
defined,  2. 

partnerships  inter  se  and  as  to  third  persons,  3. 
is  a  relation,  3. 

partnerships   distinguished   from   cori'orations,   4. 
co-owner  and  partnership  distinguished,  5. 

co-owners  sharing  profits,  6. 

joint  purchasers  of  goods  for  resale,  7. 

part  owners  sharing  produce  of  their  property,  8. 
distinguished  from  agency,  8. 
establishment  of  relation,  9. 


588  INDEX. 

[The  figures  refer  to  pages.] 

PARTNERSHIPS— Continued. 

not  created  by  operation  of  law,  9. 

created  only  by  contract,  9. 

contract  of,  requisites,  see  "Contract." 

between  firms,  16. 

consideration  of  partnership  agreement,  17-20, 

formalities.  20. 

statute  of  frauds,  21. 

■ubject-matter,    23-29. 

societies  not  having  gain  for  their  object,  24. 

what  enterprises  may  be  subject  of  a  partnership  agreement,  2B. 
what  partuershiits  .•ue  illegal,  25-29. 
eflfect  of  illegality,  29. 

existence  dependent  on  real  intention  of  parties,  30. 
what  constitutes,  30-73. 

a  relation  not  a  contract,  30,  note  102. 
a  mixed  question  of  law  and  fact.  '.ill. 
development  of  the  modern  doctrine,  34-52. 

Grace   v.    Smith,   34. 

Waugh  V.  Carver,  35. 

Cox  V.  Hickman,  37-52. 
distinction  between  sharing  profits  and  gross  returns.  36. 
paynifuts  varying  with   profits,   30. 

partnership  as  to  third  persons  abandoned  by  Cox  v.  Hickman,  38. 
Bovil's  Act,  43-49. 
New  York  doctrine,  46,  note  135. 
mutual  agency  as  a  test  of,  49,  50. 

ownership  of  profits  the  ultimate  test  of  partnersliip,  50-52. 
tests  of  intention  to  be  partners,  53-67. 

a;:reoinfnts  to  share  both  profits  and  losses,  53. 

agreements  to  share  gross  returns,  53. 

sharing  both  profits  and  losses,  55-57. 

agreements  to  share  profits  only,   58. 

partnership  in  profits  only,  62. 

stipulations  against  community  of  loss,  62,  63. 

sharing  gross  returns,  Go-G7. 
contemplated  partnerships,  (>7-70. 

partnership  articles  to  be  drawn  up,  70. 
promoters  of  corporations,  70,  71. 
defective  corporations,  liability  of  stockholders  as  partners.  71-73. 

attempt  to  incorporate.  73. 
delectus  personarura,  74,  75,  153. 

does  not  prohibit  subpartnerships,  76. 


INDEX.  689 

[The  fignires  refer  to  pages.] 

PARTNERSHIPS— Continued, 

specific  performance  of  agreement  for,  75-79. 
general   rule  against,   76. 
cases  in  which  decree  will  be  made,  76. 
specific  performance  where  account  only  is  made,  73. 
BUbpartnership,  79,  80. 
by  estoppel,  holding  out,  80-87. 
classification  of  partnerships,  88. 
ordinary  partnerships,  88. 

universal,  special,  general,  or  particular  partnerships,  S3. 
limited  partnerships,  90. 
joint-stock  companies,  90. 
trading  and   noiitrading  partnerships,   91. 
mining  partners^hips,  92. 
characteristic  features  of,  98-137. 
partnership  as  an  entity,  98-104. 

legal  and  mercantile  view,  98-104. 
legal  and  mercantile  views  contrasted.  99.  100. 
how  far  the  law  regards  a  partnersliij)  as  an  entity,  101. 
effect  of  changes  in  the  membership  of  a  partnership  according  to  the 
diEferent  aspects,  102-104. 
partnership  name,  105-112. 
necessity  of  firm  name,  105. 
what  name  may  be  used,  107-  Hi'J. 
exclusive  right  to  name,   110. 
corporation  infringing  trade  name,  remedy.  111. 
no  trade  name  without  actual  business.  111. 
what  may  be  done  in  firm  name.  111,  112. 
|>artnership  property,  113-132. 
partnership  capital,   113-119. 

contributions  other  than  in  money,  114. 
partner's  rights  as  to  capital,  114-117. 
presumption  of  equality,  contribution  of  services.  116. 
losses  impairing  crpital,  11(5,   117. 
advances  by  partner,  117. 

limitations  as  to  contributions  to  capital,  IIS,  119. 
partnership  property  in  general,  119-132. 

what  constitutes  partnership  property,  119-121. 

when  land  is  partnership  property,  120,  note  82. 

good  will  is  partnership  property,  121. 

In  profits  only,  121,  124. 

property  habitually  in  use  of  firm,  121,  124. 

property  purchased  with  partnership  funds.   124,  125. 

resulting  trusts,  statute  of  limitations,  125. 


590  INDEX. 

[The  figures  refer  to  pages.] 

PARTNERSHIPS— Continued, 

title  to  real  estate,  126,  127. 
what  rights  a  partner  has  in  firm  property,  129. 
what  rights  a  creditor  has  in  firm  property,  139. 
conTersion  of  partnership  property  into  separate  property,  and  Tict 
versa.  120-132. 
what  amounts  to  fraud  in  connection  with  such  transfer,  130. 
preferences  among  creditors  not  necessarily  evidence  of  fraud, 

131. 
no  formal  instrument  essential  to  the  conversion,  132L 
partnership  shares,   132-156. 

partners  not  joint  tenants  of  firm  property,  135-137. 
delectus  personarum,  153. 
Implied  rights  and  liabilities  of  partners  inter  se,  157-189. 
right  to  compete  with  firm,  lt)4. 

right  to  benefits  resulting  from  connection  with  firm,  1(')5. 
right  of  partner  to  indemnity  and  contribution,  171-176. 
duty  to  conform  to  agreement,  176,  177. 

right  to  have  partnership  property  applied  to  partnership  debta,  179-184. 
partner's  hen,   179-184. 
division  of  profits,  184-187. 
articles  of  partnership,  188-210. 

usual  clauses  in  articles  of  partnership,  190-210. 
actions  between  partners,  298  et  seq. 
actions  between  firms  of  common  member,  309-314 
accounting  and  dissolution,  332  et  seq. 
Joint-stock  companies,  498  et  seq. 

PARTNERSHIP   CREDITOIiS, 
see  "Creditors." 

PARTNERSHIP  PROPERTY, 
see  "Property." 
partners  are  not  tenants  in  common  of,  133-135. 
partners  not  joint  tenants  of,  135-137. 
partner's  lien,  179-184. 

right  of  partner  to  have  applied  to  partnership  debts,  179-184. 

PARTNERSHIP  SHARES, 
in  general,  132-156. 
nature  of  a  partner's  share,  132-137. 

partners  not  tenants  in  common  of  firm  property,  133-135. 

partners  not  joint  tenants  of  firm  property,  135-137. 
meaning  of  term  "share,"  134. 

share  a  right  to  money,  137. 
amount  of  each  partner's  share,  138-141. 


INDEX.  6yi 

[The  figures  refer  to  pages.) 

PARTNERSHIP  SHARES— Continued, 

are  prima  facie  equal,  138. 

meaning  of  equality,  139. 

rule  as  to  presumptive  equality  applies  to  partnerships  in  single  transac- 
tions,  140. 

evidence  showing  inequality,  140. 

application  of  rule  where  one  partnership  comprises  another,  140,  141. 
sale  of  partner's  interest  on  execution,  141-153. 
cannot  be  reached  by  garnishment,  144,  note  169. 
transfer  of  shares,  153-15G. 

effect,  153-156. 

mining  partnerships,  154. 

joint-stock  companies,  154. 

tri-nsfer  allowed  by  agreement,  154. 

rights  of  transferee,   155. 

effect  of  transfer  as  a  dissolution,  155. 

effect  of  transfer,  accounting,  155. 

PARTNER'S    LIEN, 

see,  also,   "Partners." 
not  applicable  to  joint,  but  not  firm,  debts,  276. 

PAYMENTS. 

varying  with,  but  not  out  of,   profits,  36. 

advances  not  considered  voluntary  payments,  174. 

power  of  partner  to  accept  payment  of  firm  debts,  219. 

of  partnership  debt  by  one  partner,  265. 

by  new  firm,  266. 

application  of  payments  by  partners,  266. 

rule  In  Clayton's  Case,  266. 
recovery  of  money  paid  under  fraud  or  mistake,  action  by  Arm  or  partner,  369. 
of  claims  on  dissolution,  408. 
of  firm  debts  on  dissolution,  413. 

PERSONAL  PROPERTY. 

when  partnership  realty  deemed  personalty,  127-129. 

partnership  shares,  132-156. 

share  in  partnership  a  right  to  money,  137. 

PERSONS, 

competency  of  persons  to  be  partners,   10-17. 

aliens,  11. 

felons,   11. 

infants,    11. 

married  women,  14. 

lunatics,  14. 


692  INDEX. 

(Tbe  figures  refer  to  pages.] 

PERSONS— Continued, 
corporations,   lo. 

number  of  persons  who  may  become  members  of  one  partnership.  1ft. 
partnerships  between  firms,  16. 

rilTSICIANS, 

partnership  with  unlicenseii  persons,  validity.  27. 

partnerships   between   implied  power  to  bind   firm  on  negotiable  paper,  235. 

PLEADING. 

necessity  of  prayer  for  dissolution  in  action  for  receiver.  358-361. 

PLEDGE. 

power  of  partner  to  plcilpe  firm  chattels  -IS. 

power  of  partner  to  plcdfje  firm  property  for  advances,  228. 

power  of  partner  to  redeem  pledge,  218. 

POWERS. 

of  majority.  l.'iS,  159. 

articles  not  intended  to  define  .-il!  powers  of  partnership.  190. 

of  partner  to  bind  firm.  211-235. 

determiueJ  by  principles  of  agency,  212. 

implieJ  authority  of  partner  to  bind  firm.  2i:j-21'".. 

acts  uiit  within  a  partner's  implied  |>owers.  217.  218. 
acts  within  a  partner's  implied  powers.  218-221. 
in  trading  partnerships.  221. 
to  borrow,  228,  229. 
of  members  and  officers  of  joint-stock  companies.  499. 

PREFERENCES. 

among  creditors  not  necessarily  evidence  of  fraud.  131. 

PRE-MIIM. 

for  admission  to  partnership.  18. 

returnable  in  cases  of  fraud.  18. 

returnable  where  consideration  has  failed,  19. 

apportionment  on  premature  termination  of  partnership.  19. 

for  admission  to  illegal  partnership.  29. 

not  a  contribution  to  capital,  114.  note  57. 

partner  may  sue  co-partner  at  law  for  promised  premium.  319. 

PRESUilPTION. 

of  pa^tne^!^llip,  from  sharing  of  both  profits  and  losses,  55-57. 
from  sharing  of  profits  only.  58-63. 
from  sharing  of  gross  returns.  03-67. 
of  equality  of  rights  in  capital.  115. 
property  purchased  with   partnership  funds  presumed  to  be  firm  property,  124. 

125. 
of  equality  of  one  partner's  share,   138-141. 


INDEX.  69£J 

fThe  figures  n>ler  to  payes.] 

PRINCIPAL  AXD   AGENT. 

linliilitT  (if  firm  as  uudisclosed  principal,  377. 

PRIOKITIES, 

between  firm  and  separate  creditors,  273-297. 

firm  cre<Jitors  entitled  to  priority  of  payment  out  of  firm  property,  274—280. 

partner's  rights  in  firm  property  subordinate  to  firm  creditors,  280-283. 

between  firm  and  separate  creditors  in  firm  property,  2S3. 

rights  of  separate  creditors  in  firm  property,  283.  284. 

of  separate  creditors  in  separate  property.  28.5-287. 

firm  creditors  in  separate  property,  287-293. 

in  separate  estate,  judgment  on  firm  debt,  292. 

of  rights  of  partners  in  separate  property  of  co-partner,  293. 

PROFITS, 

see,  also,  "Sharing  Profits." 
the  object  of  partnership,  23. 
sharing  profits  as  a  test  <>f  partnership.      Grace  v.  Sniit!).  34. 

Waugh  V.  Carver,  35. 

payment  varying  with,  36. 

Cox   V.  Hickman,  37-52. 

stjites  following  doctrine  of  Cox  v.  Hickman.  43.   r.ote   134. 

in  lieu  of  interest,  rent,  compensation,  annuity,  etc..  43,  note  134. 

New   York  doctrine,  40,  note  lo.j. 
ownei.ship  of,  the  ultimate  test  of  paiiiiership.  .!»0-52. 
sharing   profits  as   a    test   of   partnership.    53-67. 

tihariug  both  profits  and  losses  as  a   lest  of  partnersli  i..  ."i.j-57. 

sharing  profits  only,  presumption  of   partnership,  58-03. 

partnerships  in  profits  only.  02.  121. 
defined.  64. 

meaning  of  net  profits  and  gross  i>n)iits.  inaccurate  use.  vi4. 

"net  returns"  a  synonymous  term,  t>4. 

distinction  from  gross  returns,  64. 
sharing  profits,  subpartnership,  79,  80. 
interest  on  undivided   profits,   168. 
division  of,  184-187. 

times,  etc..   of  divi.siun,   185. 

what  is  divisible  as,  185. 

exclusion  from  share  of.   187. 

cases  where  dividends  have  been  held  not  improper.  187. 
distribution  of,  stipulation  in  articles.  203. 
impossibility  of  making,  ground  for  dissolution,  400. 
earnings  after  dissolution,  414. 

PROMOTERS, 

of  corporations  not  partners,  70.  71. 
iJKO.PAKT.— 38 


B94  INDEX. 

[The  figures  refer  to  pagv^a.] 

PROPERTY, 

see,  also,  "Assets.** 
In  traile  name,  110. 
partnership  property,  113-132. 
partnership   c:ipit:il,    113-119. 

contributions  other  than  in  money.  114. 

partner's  rights  as  to  cnpital,  114-117. 

presumption  of  equality,  115. 

losses  impairing  capital.  116,   117. 

advances  by  partner,  117. 

limitations  as  to  contributions  to  capital,  11 «.  119. 
partnership  property  in  general,  119-132. 

what  constitutes  partnership  i)r«perty.  110-lL'l 

when  land  det'niod  partiK-rshiii  property,   T-'O,  ii"te  82. 

good  will  is  partnership  property,  121. 

habitually  in  use  of  firm.  121,  124. 

p.irtnership  in  profits  only,  121,  124. 

purchased  with  partnership  funds,  124,  125. 

title  to  real  estate,  12(5.  11.'7. 

when  partnership  realty  deemod  personally.   127-129. 

what  rights  a  creditor  has  in  firm  property.  I'-'O. 

conversion  of  joint  into  separate  property,   and   vice  versa,   129-132. 
what  amounts  to  fraud  in  connection  with  such  transfer,  VM). 
preferences  among  creditors  not  necessarily  evidence  of  fraud,  131. 
no  formal  instrument  essential  to  the  conversion.  132. 
partnership   shares,    132-150. 

partners  are  not  tenants  in  common,  l.'^.'i-135. 

partners  are  not  joint  tenants  of,  135-137. 

share  in  partnership  a  right  to  money.  137. 
partner's  lien,  170—184. 

right  to  have  partnership  proiterty  applied  to  partnership  debts.   179-184. 
rights  of  partners  in  firm  property,  stipulation  in  articles,  203. 
partner's  implied  power  to  buy  or  sell  property,  231-234. 
creditor's  rights  in  firm  and  separate  property.  273-297. 
right  of  firm  creditors  in  firm  property.  'J74. 

firm  property  wrongfully  disposed  of  by  one  partner,  rights  of  copartners,  M 
of  limited  partnership,  rights  of  special  partner  in,  462. 
of  insolvent  limited  partnership  a  trust  fund  for  creditors,  48U482. 

PROSECUTING  ATTORNEY, 
partnership  in  office  of.  28. 

PROVINCE  OF  COURT  AND  .JURY, 
see    "Court    and    Jury." 


INDEX.  696 

[The  figures  rpfer  to  pages.] 


PUBLICAnON. 

notice  of  dissolution  or  retirement,  264. 

of  certificate  of  limited  partnership,  435  et  seq. 

time  of,  436. 

proof  of,  440. 
of  notice  of  dissolution  of  limited  partnership.  491, 

PUBLIC   POLICY, 

contracts  illegal  because  opposed  to,  25. 


R 

RATIFICATION, 

of  act  of  partner,  212. 

by  incoming  partner  of  previous  nets  of  co-partnors,  2."1.  252. 

REAL  ESTATE, 

when  deemed   firm  property,   120,   note  82. 

title  to  firm  real  estate,  126,  127. 

when  partnership  realty  deemed   i)ersoiialty,   127-129. 

conveyances  of  in  firm  name,  eCFect,  112. 

RECEIVERS, 

actions  between  partners  for,  345. 
of  partnership,  notion  for,  350  et  seq. 
principles  on  which  apijointment  is  made,  3.50,  351. 
not  appointed  unless  a  dissolution  be  sought,  352. 
exceptions  to  rule,  352. 

necessity  of  prayer  for  dissolution.  .■^53,  3.54. 

not  ordered  in  every  case  where  a  case  for  dissolution  i.s  made,  354. 
death  or  bankruptcy  of  one  member  not  a  ground  for  a  receiver,  356. 
misconduct  of  partner  a  ground  for  a  receiver,  358. 
course  of  court  where  partnership  is  denied,  361. 

appointment   where   partners   have  by   agreement   divested   themselves   of  the 
right  of  winding  up,  361. 

RECORD, 

of  certificate  of  limited  partnership,  433^35. 

of  notice  of  dissolution  of  limited  partnerships  by  act  of  parties,  491. 

REDEMPTION, 

of  pledge,  power  of  partner,  218. 

RELEASE, 

power  of  partner  to  bind  firm  by,  219. 
of  one  partner  to  contract,  246. 
covenant  not  to  sue  one  partner,  24tt. 


■^^^  INDEX. 

[The  figures  refer  tc  pagea.J 

RELEASE]— Continned, 

covenant  not  to  sue  differs  from  release,  2681. 
of  one  partner  discharges  all,  268. 

FiENEWALS, 

of  limited  partnership,  452  et  seq. 

KENT, 

share  of  profits  as  rent,  43,  note  184. 

RETIREMENT. 

of  partner,  dissolution.  2.59. 

of  dormant  partnersj.  n("tes.sity  of  nutice,  264. 

discharge  of  retirin-  i)artin'r's  liability  by  novation.  270, 

subrogation  of  rehiring  partner  to  rights  of  creditor.  271. 

R ETIK I NG   PA  RTNERS. 

failure  to  give  notice,  liability  by  estoppel,  83. 
stipulation  in  articles,  207. 

effect  of  retirement  in  actions  by  and  against  firm,  381-384. 
joint-stock   companies,   rights  and   liabilities,  4W. 

RIGHTS  AND  LIABILITIES. 

transfer  allowed  by  agreement,  154. 
Implied  rights  and  liabilities  inter  se,  1.57-187. 
rights  to  participate  in  management,  157,  158. 
rights  and  powers  of  majority,  158,  159. 
duty  to  e.\ercise  care  and  skill,  IGO. 
duty  to  observe  good  faith,  1(!0. 

right  to  benefits  from  transactions  concerning  firm  Interests,   102-164. 
right  to  compete  with  firm,  1G4. 

right  to  benefits  resulting  from  connection  with  tirm,  165. 
right  to  compensation  for  services,  llj,">-168,  500. 
right  to  interest  on  balances,  ll)S-171. 
right  of  partner  to  indemnity  and  contribution,  171-176. 

limit  as  to  amount  of  contribution,  174. 

right  to  contribution  when  the  outlay  concerns  an  illegal  act,   174. 

advances  not  considered  voluntary  payment,  174. 

right  to  when  loss  was  due  to  partner's  own  default,  175. 

right  to  contribution  where  partner  has  alone  become  bound,  176. 

when  is  the  right  to  contribution  enforceable,  176. 

ratification  of  unauthorized  acts,  176. 
duty  to  conform  to  agreement.  176,  177. 
right  to  information  as  to  conduct  of  business,  177. 
duty  ?o  keep  and  right  to  mspect  accounts.  178,  179, 
effect  of  keeping  no  bocks  or  of  destroying  them,  179. 


INDEX.  597 

[The  figures  refer  to  pages.l 

RIGHTS  AND  LI  A  HI  I.  ITIES— Continued, 
partner's  lien.   17'.>-1S4. 

right  to  have  i)artuership  property  applied  to  partnership  debts,   179- 

im. 

foundation  of  partner's  lien.  180. 

consequences  of  the  lien,  180. 

to  what  property  it  attaches,  ISl. 

lien  exists  only  on  partnership  assets,  181. 

lien  exi-sts  as  against  all  persons  claiming  a  share  In  the  assets,  182. 

partnership  property  appropriated  to  private  uses,   182. 

no  lien  on  a  partner's  share  for  ordinary  debts  due  from  him  to  firm, 

ISL'. 
loss  of  lien,  183. 
lien  of  co-owners,  184. 
no  lien  if  piirtuership  is  illegal,  184. 
division  of  profits,  184-187. 

what  is  divisible  as  profits.  185. 
times,  etc.,  of  division,  ISo. 

cases  where  dividends  have  been  held  not  improper,  187. 
exclusion  from  share  of  profits,  187. 
articles  of  partnershii),  188-210. 

construction  of  articles  in  general,  189. 
rules  of  construction  of  articles,  18'.>-1!)G. 

articles  not  intended  to  define  all  rights,  powers,  and  duties,  190. 
construction  with  reference  to  object  of  partnership,  191. 
construction  so  as  to  defeat  fraud,  192. 
provisions  waived  or  v.nried  by  tacit  agreement,  193. 
acts  of  the  majority  in  respect  of  changes,  IJH. 
new  partners,  how  affected  by  changes,  194. 

original  articles  apply  to  partnerships  continued  under  them,  195. 
provisions  applicable  during  the  term  of  partnership,  195. 
usual  clauses  in  articles  of  partnership,  190-210. 
general  nature  of  business,  197. 
time  when  business  shall  commence,  198. 
duration  of  llie  relation,  199. 
capital  advances,  etc.,  200. 
duties  resting  upon  partners.  203. 
profits  to  be  distributed,  203. 
rights  of  partners  in  firm  property,  203. 
keeping  of  proper  books  of  account,  204. 
restraint  upon  partners  as  to  their  transacting  similar  business  od  H- 

dividual  account,  205. 
decision  of  differences  of  partners  by  a  majority,  '205. 


598 


lADKX. 


[The  azures  refer  to  pages.] 


RlCnTS  AND  LIAP.ILITIES-Continued, 
annual  accounts,  2(hr). 
geupral   account    upon   dissolution,   200. 
refiresentatives   of   deceased    partiur   succeeding  to   his   share   la 

business,   206. 
retirement  of  partner,  and  assijrnmcnt  of  his  share,  liOtJ. 
clause  of  expulsion,  208. 
arbitration,  209. 
liquidated  damages.  210. 
power  of  partners  as  to  third  persons.  211. 
power  of  partner  to  bind  firm,  211-2:^r). 

determined  by  priiiciiilcs  of  !i^:iii(y.  1:12. 
express  authority.   LMl",   21.";. 

Implied  authority  of  partner  to  bind  firm,  213-216w 
necessity  the  limit  of  authority,  21.'">.  21(>. 
extraordinary  necessity,  21.'),  21t>. 
particular  implied  powers  of  partner,  21(V-221. 

acts  not  within  a  partner's  implied  powers,  217,  218. 

acts  within  a  partner's  implied  powers,  21S-221. 

powers  of  fiartner  in  trading  partnerships.  "221. 

power  of  partner  to  exeeut(>  sealed  instruments.   SJ2-22L. 

release,    2'24. 

negotiable   instruments,  22-1-228. 

bona  fide  holders,  22(>-'228. 
power  to  borrow,  228-2,'iO. 
giving  security,  22!). 

power  to  bind  firm  on  simple  contracts.  2.'i(t.  'Sil, 
buying  and  selling,   231-2;44. 
to  receive  notice,  2.'M. 
liabilities  of  fiartners  to  third  persons,  23i>-24.'). 

determined  on  general  principles  of  agency,  23&. 
liabilitii-s  of  partners  in  contract,  230. 
restrictions  by  dissent,  236,  237. 
form  of  contract,  237-242. 
enaled  instruments,  238. 
nej:()tiable  instruments,  238. 
■iniple  contracts,  231). 
money  borrowed  by  one  partner,  240. 
firm  benefited  by  partner's  contract.  240. 
equitable  doctrine  in  these  ruses.  241,  242. 
niisii[)i)ropriation  of  trust   I'uiid.  241. 
goods  supplied  to  one  partner,  241, 
of  partners  in  tort,  242-245. 


INDEX.  699 

[The  Qj^iirt-s  rofer  to  pa^rfs.J 

RIGHTS  AND  LIABILITIES— Continued. 

joint  itnd  several  liabilities  of  partners,  245-l.'49. 
contracts,  245. 

release  of  one  partner.  246. 
covenant  not  to  sue,  240. 
torts,  247. 

judgment  against  one  partner,  247. 
joint  and  several  liability  by  statute,  247. 
distinction  between  torts  and  breaches  of  contract.  248* 
breaches   of  trusts.   248. 
pxtent  of  liability,  249. 
beginning  of  liability,  250-2,56. 

no  liability  before  firm  is  formed.  2.')0. 
liability   before  execution   of  articles.  250t 
for  acts  of  one  not  yet  a  partner.  251. 
Incoming  partners,  251-256. 

assumption   of   debts.   252-250. 
termination   of   partner's    liability,   257-273. 
future  acts.  257-265. 

dissolution  by  operation  of  law,  257. 
effect  of  death.  257. 
executors  continuing   business.  2.58. 
dissolution  by  act  of  partners.  2.5I)-261. 
who  entitled  to  actual   notice.   25!)  261, 
what  is  actual  notice,  262. 
notice  by   publication,   nonde:iler8.   204. 
past  acts,  265-273. 

payment  by  one  partner.  265. 
payment  by  new  firm,  260. 
application  of  payments,  266-268. 
release  of  one  partner,  268. 
covenant  not  to  sue.  268. 
novation,    269. 
merger,  271. 

deceased  partners,  272,  273. 
rights  in  firm  and  separate  property.   273-297. 
firm  creditors  in  firm  property,  274-280. 
nominal  partner  no  actual  firm.  275. 
dormant  partner  no  ostensible  firm,  276. 
joint,  but  not  firm,  debt,  276.  277. 
conversion  of  firm  into  separate  property,  277-28(1, 
partner's  rights  in  firm  property,  280-283. 
fraud.  282. 


bUU 


[The  Ijfinres  refer  to  pages.] 


HM.nTS  AND  LIABILITIES— Ck>nUuued. 
distinct  trades,  283. 
discbarge.  283. 
►fparate  creditors  in  firm  property,  283,  284. 
««';)ar:iie  creditors  in  separate  property,  2Sd  -^7. 

applying  separate  prui^rty  to  firm  debts,  L'ST. 
rights  of  firm  creditors  in  separate  property.  287-293. 
exceptions  to  rule,  no  joint  estate.  288. 
fraud.  289. 
distinct  trades,  290. 
firm  creditors  [x-titioning.  291. 
government  a  firm  creditor,  292. 
legal  priorities  previously  acquired.  292. 
marshaling  assets,  292. 
partners  in  separate  pr<>|)erty,  293-290. 

priorities  of  iiatlner's  ri;;lits  in  separnte  property,  293  298. 
fights  of  joint  and  separate  creditors  in  firm  .lud  separate  tiruperty,  298,  207, 
of  tuembers  of  limited  partnerships,  455  et  se<j. 
liability  for  debts,  45t;. 

defective  or  delayed  formation,  458  et  seq. 
efifect  inter  se,  458, 
effect  as  to  third  [lersons,  45t  et  seq. 
rights  in  firm  property.  401,  402. 
withdrawal  of  profits  or  cni>ital,  40.'i  et  aeq. 
penalty  for  withdrawal,  4tj3,  46ft. 
what  is  a  withdrawal,  404. 
remedy  for  withdrawal,  467. 
alteration,  effect,  408  et  seq. 

what  constitutes  alteration.  470,  471. 
special  partner  must  itarticipate  in  altcrntinn,  471. 
consequences  of  alteration  not  retroactive,  472. 
Interference,  special  partner  becomes  liable  to  jjeueral  partner.  472  et  seq. 

exceptions  to  rule  as  to  interference  by  special  partner,  47.'..    170. 
Insolvency,  477  et  seq. 

what  constitutes   insolvency,  477. 
fraudulent  conveynncea,  478— 4 So. 

fraudulent  conveyances,  liability  of  special  partner  concurring  1b, 
478. 
property  a  trust  fund   for  creditors,  480—482. 

when  trust  begins,  482. 
assignments  for  benefit  of  creditors,  483,  484. 
special  partner  as  a  creditor,  484  et  seq. 


INDEX.  601 

[The  figures  refer  to  pages.] 

RIGHTS  AND  MA  HI  MTIES— Continued, 

meuuiuj;  of  insolviuoj  in  tstatutes  relating  to  special  partn<T  nn  a   cred- 
itor,   4S4. 
apfilicution  of  statute,  4S5, 
termiuntion  of   relation,   dissolution   of   limited   partnerships,    4^7   et   seq. 
termination  of  future  liability,  487  et  seq. 
change  from  limited  to  general  liability,  493. 
of   members   of  joint-stock    companies,   490. 

retirement  of  member  of  joint-stock  company,  499. 
of  members  inter  se.  500. 

liability  of  members  of  joint-stock  conipanit*  to  liiird  iktsous,  501. 
ROBBERY, 

partnership  fur.  illegal,  25. 

s 

SALE. 

joint  purchaserB  of  goods  for  resale  not   nece'js.irily  parni<ni.  T. 
of  partD.-r's  interest  on  ex>>ution,  141-153. 
of  partnj-r's  share,  effect,    ir>3-]o<i. 
of  good  will  on  dissolution,  412. 
protecting  value  of  good  will,  412. 

SCOPE  OF  BUSI.NKSS. 

liability  of  linn  for  partner's  actif  within,  242-243. 

SEALS, 

partner  has  no  implied  [Muver  to  execute  sealfd  instrument"  except  releases.  222. 
liability  of  partiu^rs  on  sealed  instrument^.  '2'-\'<. 
,     action  on  seale<i  instruments  may  be  brought  only  by  parties  thereto,  366. 
liability  of  partners  in   actions   on  seqled    mstnimenis,   375. 
when  agent-partner  must  be  sued  alone,  375. 

SECRET  rARTNEUS, 
defined,  9i. 

SECURITY, 

imidied  power  of  partner  to  give,  223. 

SELLIN(;, 

partner's  Implied  power,  231-234. 

SEPARATE  CREDITORS. 
see  "Creditors." 

SER"\aCES. 

share  of  profits  as  compensation  for,  43,  note  134, 
right  of  partner  to  compensation  for,  1G5-1U>. 


602  INDEX. 

[The  fifi'ires  refer  to  pa^ea.] 

si:t-(jff. 

of  ol.iims  involving  partnership  accoaoting,  304^ 

setim.f:mp:nt. 

of  illi-p;il  partnorship.  29. 

SHARKS, 

in  partnership,  132-ir.6. 

nature  of  a  partner's  share.  13*J-137. 

meaning  of  term  "share,"  134. 

partnors  not  joint  tenants  of  firm   proi)erty,   135-13T. 

partners  not  tenants  in  common.  133-135. 

Id  partnership  a  right  to  mnnoy.  l.'^T. 

amount  of  each  partner's  sliar*-.    i;i.S-141- 

are  prima   facie  equal,   l.'V.t. 

meaning  of  "oquality."  l.I'.». 

evidence  showing  inequality,  140. 

rule  as  to  presumptive  equality  ;i]>[.lifs  to  partnerships  In  single  tmnsactlMU, 

14(). 
application  of  rule  where  one  p.-irtiuTsiiip  compriaes  anothtr.   140,  141. 
transfer  of  shares.  1 .".''.- 1  ."fi. 

Joint-stock  compniiics,   l.''>4,  4L>8l 

mining   partnerships,    154. 
In  ships,  tr.nnsft-r.  l.'i.'i. 

KITARIXr,   PKOl'ITS. 

see,  also,  "rrofits." 
as  a  test  of  partnership,  34—67. 
Grace  v.  SmitJi,  34. 
Wnugh  V.  Carver,  STt. 
payiiienta  varying  with,  3fl. 
Cox  V.  Hickman,  37-r)2. 

mutual  HK'cnry  as  a  test  of  partnership.      Cox   v.   Hickman.  87. 
Bovil's  A.-t,  43-li>. 

states  following  doctrine  of  Cox   v.  Hlckm.-m.  43.   note   l.U. 
in  lieu  of  interest,  rent  compensation,  annuity,  etc.,  43,  note  J3\ 
New  York  doctrine,  46.  note  136. 
presumption  of  partnership,  55-<>3. 
9uliii;irtiicrsliips,  79,  80. 

SHERIFF. 

partnership  In  office  of,  28. 

SHIPS, 

transfer  of  shares  in  ships,  lOfiw 


INDEX.  Buy 

[The  flguies  refer  to  pages.) 

SIGN. 

firm  si<rn  of  iimitod  partnorsliip,  449. 
what  sign  must  contain,  44i>. 

SIGNATURE. 

firm  or  individual  names,  105,  100.  and  note», 

SILENT   PAIM-NEKS. 

defined,  95. 
SKILL, 

duty  of  partner  to  exercise.   I'iO. 
SMUG(JLIN(;. 

partnorsliip  for.  illegal,  25. 

SOCIETIES. 

not  luiviiif;  t:.iiii   fur  tlieir  object   not    i-.-irt tiMr^hips.  24. 

SPECIAL  I'AKTNKU. 
see  "I'artncrs." 
defined,  9:i. 

SPECIAL  PAKTNEKSIIIP, 

see  "Limited  I'lirtnership." 
defined.  80. 
specLnl.  limited,  and  particular  partnership"  .li.-tiMi:iii«herl.  418. 

SPECIFIC  rEHFORMANCE, 

of  aj;reement  for  a  [inrtnership,  75-79. 

general  rule  against  sitecific  performance  of  aj:r>t  miiiUt   fur  partnershipB,  76 

cases  in  which  decree  will  he  tnatle.  7(V-7S. 

where  account  only  is  wanted.  78.  7U. 

of  special  agreements  between  partners.  344.  '6-i^. 

STATUTE  OF  FRAUDS. 

partnersjiips  in  land,  21. 

application  to  contracts  of  partnership.  21. 

STATUTE  OF  LIMITATIONS. 

resulting  trusts,  property  purchased  with  paritM-rship  funds,  128. 

STATUTES, 

authoriziiij;  limited   pariiK-rship.  strict   or   libt  r.il   oonslruction   of  limited   part- 
nership statutes,   422,  42Ii. 

STOCIvHOLDERS, 

in  defective  corporations,  liability  as  partners,   71 -7it. 

SUBPARTNERSHIPS. 
in  general,  79.  80. 

not  prohibited  by  doctrine  of  delectvus  personarum.  75. 
liability  to  creditors.  80. 


bU-i  INDEX. 

(  Tlif  li;,'Uirs  "efer  to  pagi'S.J 

^UBKOCATION. 

of  crftlitor  to  partner's  li>n.  l.'.u. 
of  lender  to  riglits  <>f  linu  cnMiiors,  241.  242. 
of  lender  to  rights  of  borrowing  partntr.  '242. 
of  retiring  |>uriuer  to  rights  of  creditor,  L'Tl. 
of  separnfe  ereditors  to  partner's  lien.  UM. 

SUKETYSHir, 

change  in  firm  membership  discharges  surety  of  firm,  108. 

SUKVmNG  PARTNERS. 
rights  of,   135. 
actions  agniast,  ;;H4. 

actions  ngain^t  reiiresentntive  of  latest  survivor,  ;-{H4. 
right  to  wind  up  partnership  MlTiiirs.  410.  411. 
right  to  compeosatiou  for  winding  up  fircu  aQair«,   lt>7.  41 L 


r  K.N  A  NTS  IN  COM.MON. 
see  "Ctj-owiiership." 
partuerM  are  iiui,   in  Tn  tii  property,   l.'i,'{-135. 

lENDER. 

power  of  piiriiu T  to  mjiUe  and  accept  tender  of  payment.  220. 

rERMINAlloN. 

see.  also.  "I 'issolution." 
of  partnirsliip  by  change  in   nienibershii),   10".:. 
stipulation  in  miirles  as  to  duration  of  firm,  Wyj. 
of  [tartner's  liahiliiy,  2r>T-2T3. 
of  limited  partnership.  4^S7  et  seq. 

see,  also,  "Limited   I'artnership.'* 
of  joint -stock  companies.  5U3. 

THEFT, 

partnership  for,  illegal,  25. 

TIME. 

when  business  shall  commence  stipulation  In  articles,  198. 
partnersiiip  for  a  definite  time,  dissolution,  35)3-396. 
partnership  for  an  in<lefinite  time,  300,  30G. 
of  publication  of  certificate  of  limited  partnership,  43ft. 

TITLE. 

to  partnership  real  t^t.'ite,   126,  127. 

to  firm  property  neither  a  joint  tenancy  nor  tenancy  in  common.  132-137 


INDEX.  606 

[The  figures  refer  to  pages.] 

TORTS. 

rights  and  liabilities  of  partners,  242-245. 

joint  and  sevcnil  liability  of  partners  for,  247. 

breaches  of  trust,  248. 

distinction  between  torts  and  breaclios  of  contract.  248. 

action  at  law  between  partners  for,  322-825. 

actions  of  torts  against  partners,  joinder  of  defendnnts,  378. 

by  one  partner,  rights  of  co-partners  against  third  persons,  388--391, 

TRADE  NAME, 
See  "Name." 

TRADING  PARTNERSHIP, 
defined,  91,  92. 
power  of  partner  in.  221. 

implied  po\v(<r  of  partners  to  bind  firm  on  negotiable  pnper,  224-228. 
implied  power  of  partner  to  borrow,  22S.  229. 

TRANSFER. 

of  partnership  share,  153-156. 

allowed  by  agreement,  154. 

of  partner's  share,  dissolution,  subject  to  stipnlntion.  396. 

of  shares  in  joint-stoclt  companies.  498. 

TRUSTS. 

resulting  trusts,   property    purchased    witii    p;iriiieisliip   funds.    \2!i. 

misappropriation  of  trust  fund,  liability  of  firm,  241. 

property  of  insolvent  limited  partnership  a  trust  fund  for  creditors,  480-482. 


u 

INDISCT.OSED  PRINCIPAL. 

contract  in  name  of  [)artncr.  action  by  firm.  .''fVJ. 
lialiility  of  firm  as  an  undisclosed  principal.  377. 

I'NIVERSAL  PARTNERSHIP, 
defined  rind  exi)lained,  88. 

I'SUPvY, 

sharing  profits,  partnershii>,  34,  35. 

V 

V^OLUNTARY   I'A  V.M i:\  IS. 

advances  nut  considered  voluntary  payments,  174. 


0)00  INUKX. 

ITbf  lii;urt.'s  refer  to  pages.] 

w 

WAIVER, 

of  provisions  in  articles  of  partiRTsliip,  lJi3. 

WAR, 

partnership  for  trading  in  enemy's  coiiiitry  illegal,  'JS. 
dissolution  of  partnership  by.  'S>~.  4<f2. 

WARRANTY, 

implied  power  of  partner,  warranty  of  property  sold.  1!33, 

WINDING  UP, 

see  "Dissolution." 

WITHDRAWAL. 

of  profits  or  capital,  4(>;'i  et  si-q 

penalty  for,  4<S,  400. 

what  constitutea,  404. 

operate!  aa  dissolution  in  s<n><'  <«f  tcrniinntioi)  of  limited  liability.  493. 


VOUNG  MEN'S  CIIRISII.V.X  .\.SS(>(;i.\T10N. 
not  a  partut-rship.  IM.  tx-ir  T.i. 


•  CiiT    PUBUHIilMU    OO..   PKl.XTERS  A  Ml)  BTKUCUT^  I'tlM.  ST.   PAlTL,   MI.'VH. 


Comprises  elementary  treatises  on  all  the  principal  sub- 
jects of  the  law.  The  books  are  made  on  the  same  gen- 
eral plan,  in  which  certain  special  and  original  features 
are  made  prominent. 

Cbc  'Tlornbook  plan/' 

Is  to  set  forth  the  leading  principles  in  black-letter  (like 
this) 

And  to  give  the  necessary  amplification,  explanation,  ap- 
plication, etc.,  under  the  principles,  in  type  like  this.  The 
authorities  are  grouped  in  footnotes  at  the  bottom  of  the 
page.* 

This  shows  why  these  books  are  found  so  serviceable  as 
practitioners'  handbooks.  A  lawyer  may  want  to  be  re- 
minded of  the  law ;  in  that  case  he  wants  it  presented  in 
such  a  way  that  he  can  pick  out  what  he  needs  with  the 
least  trouble. 

♦The  Hornbook  Series  now  include?  treatises  on  Agency,  Admi- 
ralty, Bailments.  Bills  and  Notes.  Common-Law  Pleading:.  Constitu- 
tional Law,  Contracts.  Corporations,  Criminal  Law,  Criminal  Pro- 
<-odure,  Damapess  Elementary  Law,  Eqnity  .Turisprudenee.  Equity 
f'leadinp.  Evidence.  Executors  and  Administrators.  Fetleral  Juris- 
diction and  Procedure.  Insurance.  International  Law,  Interpreta- 
tion of  Laws.  Mining  Law.  Negligence,  Partnership.  Persons  and 
Domestic  Relations.  Public  Corporations,  Real  Property  Sales 
Torts  (2  vols.)  and  Wills, 


Uniform  price,  i^3.75  a  volume,  delivered. 
Bound  in  American  Law  Buckram. 


West  Publishing  Co. 

St.  Paul,  Minn. 

too  William  St.  225  Dearborn  St. 
New  York.  Chicago. 


06559a 


13>avvow5  on  Tlca\\q,cncc. 

1899.     G34  pages.     $.3.7o  delirered. 
By  MORTON  BARROWS.  A.  B.,  LL.  B. 


TABLE    OF    CONTENTS. 

Chap. 

1.  Definition  and  f]s8ontial  Elouirnts, 

2.  0«)ntrn)uti)rj-  NegllgeuL-e, 

3.  Liability  of  Mastpr  to  Servaat. 

4.  Lial)illty  of  M«stor  to  Tliini  TtTsons. 

5.  C<Juinion  Carriers  of  Passtm^ors. 
G.  Carriers  of  (JooiLs. 

7.  Oicupatloii  and  Use  of  I.«nd  and  Water. 

8.  DanRpnuis  In.striunontalitioB. 

0.  Negligence  of  Attorneys,  Physicians,  and  Tublic  Officers. 

10.  Death  l»y  Wrongful  Act 

11.  Negligence  of  Mualclpal  Corporations. 


C6559-1 


Black  on  (Eonstnxctton  anb 
3ntcrpretatton  of  £atr»s. 

1911.    624  pages.    $3.75  delivered. 

By  H.  CAMPBELL  BLACK, 

Author  of  Black's  Law  Dictionary,  and  Treatises  on  Constitution- 
al Law,  Judgments,  etc. 

Second  Edition. 


TABLE    OF    CONTENTS. 

Chap. 

1.  Nature  and  Office  of  Interpretation. 

2.  Construction  of  Constitutions. 

3.  General  Principles  of  Statutory  Construction. 

4.  Pi-esumptions  in  Aid  of  Construction,  and  Consideration  of  Ef- 

fects and  Conse(iuences  of  Act. 

5.  Literal  and  Grammatical  Construction,  Meaning  of  Language, 

and  Interpretatiiiii  of  Words  and  Phrases. 
G.  Intrinsic  Aids  in  Statutory  Construction. 

7.  Extrinsic  Aids  in  Statutory  Construction. 

8.  Construction  of  Statute  as  a  Whole  and  with  Reference  to  Ex- 

isting Laws. 

9.  Interpretation  with  Reference  to  Common  Law. 

10.  Retrospective  Interpretation. 

11.  Construction  of  I'rovisos,  Exceptions,  and  Saving  Clauses. 

12.  Strict  and  Liberal  Construction. 

13.  Mandatory  and  Directory  Statutes  and  Provisions, 

14.  Amendatory  and  Amended  Acts. 

15.  Construction  of  Codes  and  Revised  SUtutes. 

16.  Adopted  and  Re-enacted  Statutes. 

17.  Declaratory  Statutes. 

18.  The  Rule  of  Stare  Decisis  as  Applied  to  Statutory  Construc- 

tion. 


C6559a-2 


Black's  Constttutional  £atp. 

1910.     8GS  pages.     $3.75  delivered. 


By  H.  CAMPBELL  BLACK, 

Author  of  Black's  Law  Dictionary.  Treatises  on  Judgments, 
Tax  Titles.  BaukruptQ-,  etc. 


Third  Edition. 


TABLE    OF    CONTENTS. 
Chap. 

1.  Definitions  and  Oeneral  Princlplea. 

2.  The  United  States  and  the  States. 

3.  Establishment  and   Amendment  of  Constltutlona 

4.  Construction  and  Interpretation  of  Constitutions. 

5.  The  Tlirt-e  Departments  of  Cioverument. 
(j.  The  Federal  Kxeiutive. 

7.  Federal  Jurisdiction. 

8.  The  Powers  of  Congress. 

0.   Interstate  Law  as  I>etermined  by  the  Constitution. 

10.  The  Establishment  of  Republican  Government. 

11.  Executive  Power  in  the  States. 

12.  Judicial  Powers  in  the  States. 
i;j.  Legislative  Power  in  the  States. 

14.  The  Police  Power. 

15.  The  Power  of  Taxation. 

16.  The  Right  of  Eminent  Domain. 

17.  Municipal  Corporations. 

18.  Civil  Rights,  and  Their  Protection  by  the  Constitution. 

19.  Political  and  Public  Rights. 

20.  Constitutional  Guaranties  in  Criminal  Oases. 

21.  Laws  Imi)airing  the  Obligation  of  Contracts. 

22.  Retroactive  Laws. 


C6559a-3 


Black  on  CI?e  Cau?  of 
3ubtcial  Prccebenls 

ottbe 

Sckncc  of  Case  £atp 

1912.     766  pages.     $.3.75  delivered 
By  H.  CAMPBELL  BLACK 


TABLE  OF  CONTENTS 

Chap. 

1.  Nature  and  Authority  of  Judicial  Precedents. 

2.  Dicta. 

3.  Doctrine  of  Stare  Decisis. 

4.  Constitutional  and  Statutory  Constnictioa. 

5.  Rules  of  Property. 

6.  The  Law  of  the  Case. 

7.  Authority   of   Precedents   as    Between   Various   Courts   of   the 

Same  State. 

8.  Authority  of  Precedents  as  Between  the  Various  Courts  of  the 

United  States. 

9.  Decisions  of  Federal  Courts  as  Authorities  in  State  Courts. 

10.  Decisions  of  Courts  of  Other  States. 

11.  Decisions  of  Courts  of  Foreign   Countries. 

12.  Federal    Courts    Following    Decisions    of    State    Courts;     in 

General. 

13.  Same;    Matters  of  Local  Law  and  Rules  of  Property. 

14.  Same;    Validity  and  Construction  of  State  Constitutions  and 

Statutes. 

15.  Same;    Federal  Questions. 

16.  Same;    Commercial  Law  and  General  Jurisprudence. 

17.  Same;    Equity  and  Admiralty. 

18.  Same;    Procedure  and  Evidence. 

19.  Effect  of  Reversal  or  Overruling  of  Previous  Decision. 


06559-3% 


ClarU  on  Contracts. 

1904.     093  pages.     $3.75  delivered- 

By  WM.  L.  CLARK,  Jr. 

Second  Edition:    By  FRANCIS  B.  TIFFANY. 


TABLE    OF    CONTENTS. 


Chap. 

1.  Contract  In  General. 

2.  OfTt'r  and  Acceptance. 

;?.  Classification  of  Contracts. 

4.  Kciiuin'nipnt  of  Writing. 

5.  Consideration. 

n.  Capacity  of  Tartlos. 

7.  lioality  of  Consent. 

8.  LoKality  of  Object. 

9.  Operation  of  Contract. 

10.  Interpretation  of  Contract. 

11.  Discharge  of  Contract. 
11!.  Agency. 

13.  Quasi  Contract 


(jiUj'Aj-o 


Clark  on  Corpomttons. 

1907.    721  pages.    $3.75  delivered. 

By  WM.  L.  CLARK,  Jr., 

Author  of  "Criminal  Law,"  "Criminal  Procedure,"  and  "Contracts." 

Second  Edition:   By  FRANCIS  B.  TIFFANY. 


TABLE    OF   CONTENTS. 
Chap. 

1.  Of  the  Nature  of  a  Corporation. 

2.  Creation  and  Citizenship  of  Corporations. 

3.  Effect  of  Irregular  Incorporation. 

4.  Relation  between  Corporation  and  its  Promoters. 

5.  Powers  and  Liabilities  of  Corporations. 
G.  Powers  and  Liabilities  of  Corporations. 

7.  Powers  and  Liabilities  of  Corporations. 

8.  The  Corporation  and  the  State. 

9.  Dissolution  of  Corporations. 

10.  Meml>ership  in  Corporations. 

11.  Membership  in  Corporations. 

12.  Membership  in  Corporations. 

13.  Management  of  Corporations — Officers  and  Agents. 

14.  Rights  and  Remedies  of  Creditors. 

15.  Foreign  Corporations. 
Appendix. 


C6559-6 


Clark's  Criminal  £au\ 

1902.    517  pages.    $3.7.";  delivered. 

By  WM.  L.  CLARK,  Jr.. 

Author  of  a  ••IIaadl>x>k  of  the  Law  of  Coutracts." 

Second  Edition:    By  FRANCIS  B.  TIFFANY. 


TABLE    OF    CONTENTS. 

Chap. 

1.  Definition  of  Crime. 

2.  Criminal  Law. 

3.  Classiflcntlon  of  Crimes. 

4.  The  Mental  Element  In  Crime. 

5.  rersona  Capable  of  Committing  Crime. 
G.  Parth*  Concerned. 

7.  The  Overt  .\ct. 

8.  Offenses  aRalnst  the  Person. 

9.  Offeu.ses  aRaimrt  tbe  Person. 

10.  Offenses  against  the  Habitation, 
n.  Offctises  agninst  Property. 

12.  Offenses  agniust  the  Public  Health.  .Morals,  etc. 

13.  Offensee  against  Public  Justice  and  Authority. 

14.  Offenses  against  the  Public  Peace. 

15.  Offenses  against  the  Oovenameot 

16.  Offenses  against  the  Law  of  Nations. 

17.  Jurisdiction. 

18.  Former  Jeopardy. 


06559-7 


(£Iark's  Criminal  Proceburc. 

1895.     G05  pages.     $3.75  delivered. 

By  WM.  L.  CLARK,  Jr., 

Author  of  a  "Handbook  of  Criminal  Law,"  and  a  "Handboc*  of 

Contracts." 


TABLE    OF   CONTENTS. 
CU&p. 

1.  Jurisdiction. 

2.  Apprehension  of  Persons  and   Property. 

3.  Preliminary  Examination,  Bail,  and  CommitmenL 

4.  Mode  of  Accusation. 

5.  Pleading — The  Accusation. 

6.  Pleading — The  Accusation. 

7.  Pleading — The  Accnisation. 

8.  Pleading — The  Acciisation. 

9.  Pleading — The  Accusation. 

10.  Pleading  and  Proof. 

11.  Motion  to  Quash. 

12.  Trial  and  Verdict. 

13.  Proceedings  after  Verdict. 

14.  Evidenca 

15.  Habeas  Corpus. 

C6559-« 


1 


^rosiPcU  oil  (f  xocutors  an't^ 
Cibminisivatovs. 

1S97.     COG  pages.     $r..7r.  (K-livered. 

By  SIMON  GREENLEAF  CROSWELL, 

Anthor  of  "Electricity."  "Patent  Cases,"  etc. 


TABLE    OF    CONTENTS. 

Chap. 

Tart  1.— DEFINITIONS  .\NI>  DIVISION  OF  SUBJECT. 

1.  Definitions  and  Division  of  subJtHt. 

Tart  2.— APPOINTMENT  AND  QI'ALIFICATIONS. 

2.  Aj)i)ftintmpiit  in  ('<inrt. 

.S.  Place  and  Time  «>f  Appointment  and  Ucqnisites  Therefor. 

4.  Wlio  may  Claim  Aiiimintment  as  Exeiiitnr. 

5.  Wild  may  Claim   the  Ui^lit  to  Administer. 

6.  Dis^pialilieations  fnr  the  ottlce  of  Executor  or  .\dministrator. 

7.  Aeceptance  or  Kenunciat inn. 

8.  Pro(«f<lin^s  for  AiiiMiintmcnt  of  Executors   and  Admiulstrn- 

tnrs. 
t».   SiK'iial  Kinds  of  Administrations. 

10.  I'liT'l;:!!  luid  Interstate  Administr.ition. 

11.  J:>int  ExeenfiTs  and  Administrators. 

12.  Administration  Bonds. 

Part  3.— POWEItS  AND  DUTIES. 

13.  Inventory — Api)raisement — Notice  of  Apitointraent. 

14.  A.«;sets  <if  tlie  Estate. 

l.^.   Management  of  tlie  Estate. 

16.  Sah's  and  Conveyances  of  Persona!  or  r'e.al  Assets. 

17.  Payment  of  Del)ts  and  Allowances — Insolvent  Estates. 

18.  Payment  (»f  Legacies. 

19.  Distritiution  of  Intestate  Estates. 

20.  Administration  Accounts. 

Part  4.— TERMINATION  OF  OFFICE. 

21.  Revocation  of  Letters — Removal — Resignation. 

Part  5.— REMEDIES. 

22.  Actions  by  Executors  and  Administrators. 

23.  Actions  agaiiist  Executors  and  Administrators. 

24.  Statute  of  Limitations — Set-oCf. 

25.  Evidence  and  Costs. 


CGr,.^.9-9 


(losttcjan  on  2ninin(3  taw, 

190S.     765  pages.     $3.75  delivered. 

By  GEORGE  P.  COSTIGAN,  Jr. 
Dean  of  the  Collei;e  of  I^iw  of  the  University  of  Nebraska. 


TABLE    OF    CONTENTS. 

Chap. 

1.  The  Origin  'incl  History  of  American  Mining  Law. 

2.  The  Mining  Law  Statns  of  the  States.  Territories,  and  Posses- 

sions of  the  United  States. 

3.  The  I^ind  Department  and  the  rublic  Surveys. 

4.  The   lielatiou   Between   Mineral   Lands  and   the  Public   Land 

Gi'ants. 

5.  The  Relation  Between  Mineral  Lands  and  Homestead,  Timber 

and  Desert  Kntries. 
G.  The  Relation  Bec\\een  Mineral  Lands  and  the  Various  Public 
Land  Reservations. 

7.  The  Relation  Between  Mineral  Lands  and  Townsites. 

8.  Detinitions  of  Practical  Mining  Terms. 

9.  Detinitions  of  Mining  Law  Terms. 

10.  The  Discovery  of  Lode  and  Placer  Claims. 

IL  Who  May  and  Who  May  not  Locate  Mining  Claims. 

12.  The  Location  of  Lode  Claims. 

13.  The  Ix)cation  of  Mill  Sites. 

14.  Tlie  Location  of  Tunnel  Sites  and  of  Blind  Lodes  Cut  by  Tun- 

nels. 

15.  The  Location  of  Placers  and  of  Lodes  within  Placers. 
l(').  The  Annual  Labor  or  Improvements  Re<piirements. 

17.  The  Abandonment,    Forfeiture,   and    Relocation  of   Lode  and 

Placer  Mining  Claims. 
IS.  Uncontested  Application  to  Patent  Mining  Claims. 
10.  Advex-se  Proceedings  and  Protests  Against  Patent  Applications. 

20.  Patents. 

21.  Subsurface  Rights. 

22.  Coal  Land  and  Timber  and  Stone  Land  Entries  and  Patents. 

23.  Oil  and  Gas  Leases. 

24.  Other  Mining  Contracts  and  Leases. 

25.  Mining  Partnerships  and  Tenancies  in  Common. 

26.  Conveyances  and  Liens. 

27.  Mining  Remedies. 

28.  Water  Rights  and  Drainage. 
Appendices. 


CC55i>-9i/2 


(Saton  on  tfciuity. 

ICHJl.     I'M  pages.     $3.75  delirered. 

By  JAMES  W.  EATON. 

Editor    3d    Edition    Collier    on    Bankruptcy.    Co-Editor    American 

Bankruptc-y  Reports,  Eaton  aud  <Jreene'3  Negotiable 

iB^truiueDts  I^aw.  etc. 


TABLE    OF    CONTENTS. 

Origin  and  IlLstory. 

General  rrinrlples  GoTernlog  the  Exercise  of  Equity  Jarladirtion. 

Mnxlrns. 

IN-niiltios  and  Forfeitures. 

Priorities  and  Notice. 

Bonn  Fide  Purchasers  Without  Notice. 

I'>iiiital)!e  Estopp«*l. 

Klf^ctlon. 

Sati.sfactlon  and  Performance. 

OjnTerslon  and  ReoonrersloD. 

Ao'Ident. 

Mia  take. 

Fraud. 

Equitable  Property. 

Iuiplie<i  Trust.i. 

Powers,  DutieR,  and  Liabilities  of  Truste««. 

Mortgages. 

E»]uitable  LieD.s. 

Assignments. 

Reme<lies  Seeking  Pecuniary  Relief. 

Specific  Performance. 

Injunction. 

Partition,  Dower,  aud  Establishment  of  Boundaries. 

Reformatioa,  Cancellation,  and  Cloud  on  Title. 

Ancillary  Remedies. 


C655W  10 


^arbncr  on  Wills. 

1903.     72G  pages.     $3.~.  delivered. 

By  GEORGE  E.  GARDNER, 
Prtrfessor  iu  the  B<^»eton  University  Law  School. 


TABLE    OF    CONTENTS. 
Cbap. 

1.  HiPtory  of  Will»— Introduction. 

2.  Form  of  Wills. 

3.  Nuncupative.  Ilolographic,  Conditional  Wills. 

4.  Agreements  to  Make  Wills,  and  Wills  Resulting  from  Aeree^ 

ii.  Who  may  be  a  Testator. 

G.  KestrairituiK^n  Power  of  Teetamentary  Disposition— Who  may 
be  lieueficiaries— What  may  be  Disposed  of  by  Will. 

7.  Mistake,  Fraud,  and  Undue  Influence. 

8.  Execution  of  Wills. 

f>.  Revocation  and  Republication  of  Wills. 

10.  Conflict  of  Laws. 

11.  Probate  of  Wills. 

12.  Actions  for  the  Construction  of  Wills. 

13.  Construction  of  Wills — Controlling  Principles. 

14.  Construction— De«ription  of  Subject- Matter. 
lo.  Construction— Description  of  Beneficiary. 

16.  Construction— Nature  and  Duration  of  Interests. 

17.  Construction-Vested  and  Contingent   Interests-Remainders 

— Fxecutory   Devises.  «"iuria 

18.  Construction— Conditions. 

19.  Coustnictiou— Testamentary  Trusts  and  I'owers. 

20.  Legacies  -  General  -  Specific  -  Demonstrative  -  Cmnulative 

—Lapsed  and  ^  oid  —  Abatement  —  Ademption  —  Advance- 
ments. »"»au<.T7- 

21.  Legacies  Charged  upon  Land  or  Other  Pror>erty. 

22.  Payment  of  the  Testator's  Debts. 

23.  Election. 

24.  Rights  of  Beneficiaries  Not  Previously  Discussed. 


CtKio9-12 


(Bilmorc  on  Partnership. 

1911.    About  775  pages.    $3.75  delivered. 

By  EUGENE  A.  GILMORE. 

Author  of  Gllmore's  Cases  on  Partnership 
(Americau  Casebook  Series). 


TABLE    OF    CONTENTS. 

Chap. 

1.  What  Constitutes  a  Tartnership. 

2.  FormatJoii  and  Clas.slflcation  of  Partnerships. 

.3.  Tlie  Nature  and  Characteristics  of  a  Tartnershlp. 

4.  Nature.  Extent,  and  Duration  of  Partnership  Liability. 

r>.  Powers  of  Partners. 

G.  Ulght.s  and  Duties  of  Partners  Inter  se. 

7.  Remedies  of  Creditors. 

8.  .\ctlons  Between  I'artners. 

9.  Actions  Hetween  I'artJiers  and  Third  Persons. 

10.  Termination  of  the  Partnership. 

11.  Limited  Partnershii)s. 


06559a-13 


^aU  on  Bailments  anb 
Carriers. 

1896.  675  pages.     $3.75  delivered. 
By  WM.  B.  HALE. 


TABLE    OF    CONTENTS. 

Chap. 

1.  In  General. 

2.  Bailments  for  Sole  Benefit  of  Bailor. 

3.  Bailments  for  Bailee's  Sole  Benefit. 

4.  Ballment.s  for  ilutual  Benefit— Pledges. 

5.  Bailments  for  Mutual  Benefit— Hiring. 

6.  Innkeepers. 

7.  Carriers  of  Goods. 

8.  Carriers  of  Passengers. 

9.  Actions  against  Carriers. 


CG55y-15 


f}aU  on  r^amagcs 

1912.     $3.75   delivered 

By  WM.  B.  HALE 
Antbor  of  "Bailments  and   Carriers " 

Second   Edition:    By   ROGER  W.  COOLEY 


TABLE    OF  CONTENTS 

Chap. 

1.  Definitions  and  General  Principles. 

2.  Nominal    Damages. 

3.  Compensatory   Damages. 

4.  Bond.s.  Liquidated  Damage*  and  Alternative  Contracts. 

5.  Interest. 
G.  Value. 

7.  Exemplary  Damages. 

8.  Pleading  and  Practice. 

9.  Breach  of  Contract.s  for  Sale  of  Goods. 

10.  Damages  in  Actions  against  Carrier. 

11.  Damages  in  Actions  against  Telegraph  Companies. 

12.  Damages  for  Death  by  Wrongful  Act. 

13.  Wrongs  Affecting  Real  Property. 

14.  Breach  of  Marriage  Promise. 

C6559a-16 


^ale  on  Corts. 

1896.     636  pages.     $3.75  delivered. 

By  WM.  B.  HALE. 
Author  of  "Bailments  and  Carriers,"  etc. 


TABLE   OF   CONTENTS. 

Chap. 

1.  General  Nature  of  Torts. 

2.  Variations  in  Normal  liight  to  Sue. 

3.  Liability  for  Torts  Committed  by  or  with  Others. 

4.  Discharge  and  Limitation  of  Liability  for  Torts. 

5.  Remedies  for  Torts — Damages. 

6.  Wrongs  Affecting  Freedom  and  Safety  of  Person. 

7.  Injuries  in  Family  Relations. 

8.  Wrongs  Affecting  Reputation. 

9.  Malicious  Wrongs. 

10.  Wrongs  to  Possession  and  Property. 

11.  Nuisance. 

12.  Negligence. 

13.  Master  and  Servant. 


CU559-17 


^opluns  on  ^ca\  Property. 

189G.     589  pages.     $3.75  delivered. 
By  EARL  P.  HOPKINS,  A.  B.  LL.  M. 


TABLE    OF   CONTENTS. 

Chap. 

1.  What  is  Real  Property. 

2.  Touure  and  Soisiii. 

3.  Estates  as  to  Quantity — Fee  Simple 

4.  Estates  as  to  Quantity — Estates  Tall. 

5.  Estates  as  to  Quantity — Conventional    r.ifo   Estates. 
<j.  Estates  as  to  Quantity — Legal   Life  Estates. 

7.  Estates  as  to  Quantity — Less    than    Freehold. 

8.  Estates  as  to  Quality  on  Condition — on  Limitation. 
!>.  I<]states  as  to  Quality — Mortgages. 

10.  Equital)le  Estates. 

11.  Estates  as  to  Time  of  Enjoyment — Future  Estates. 

12.  Estates  as  to  Number  of  Owners — Joint  Estates. 

13.  Incorporeal  Hereditaments. 

14.  Legal  Capacity  to  Hold  and  Convey  Realty. 
1.5.  Restraints  on  Alienation. 

16.  Title. 


CC559-18 


^ugf^es  on  Ctbrntmlty. 

1901.    504  pages.    $3.75  delivered. 
By  ROBERT  M.  HUGHES,  M.  A. 


TABLE    OF   CONTENTS. 

The  Origin  and  History  of  the  Admiralty,  and  its  Extent  in  the 
United  States. 

Admiralty  Jurisdiction  as  Governed  bv  the  Subject-Matter 

General  Average  and  .Marine  Insurance. 

Bottomry  and  Respondentia  ;  and  Liens  for  Supplies,  Repairs,  and 
Other  Necessaries. 

Stevedores'  Contracts,  Canal  Tolls,  and  Towage  Contracts 

Salvage. 

Contracts  of  Affreightment  and  Charter  Parties. 

Water  Carriage  as  Affectis.!  by  the  Ilarter  Act  of  February  13,  1893 

Admiralty  Jurisdiction  in  Matters  of  Tort. 

The  Right  of  Action  in  Admiralty  for  Injuries  Resulting  Fatally 

Ports  to  the  Property,  and  Herein  of  Collision. 

The  Steering  and  Sailing  Rules. 

Rules  as  to  Narrow  Channels,  Special  Circumstances,  and  General 
Precautions. 

Damages  in  Collision  Cases. 

Vessel  Ownership  Independent  of  the  Limited  Liability  Act 

Rights  and  Liabilities  of  Owners  as  Affected  by  the  Limited  Lia- 
bility Act. 

The  Relative  Priorities  of  Maritime  Claims. 

A  Summary  of  Pleading  and  Practice. 

APPENDIX. 

1.  The  Mariner's  Compass. 

2.  Statutes  Regulating  Navigation,  Including: 

(1)  The  International  Rules. 

(2)  The  Rules  for  Coast  and  Connecting  Inland  Waters. 

(3)  The  Dividing  Lines  between  the  High  Seas  and  Coast  Wa- 

ters. 

(4)  The  Lake  Rules. 

(5)  The  Mississippi  Valley  Rules. 

(6)  The  Act  of  March  3.  1899,  as  to  Obstructing  Channels. 

3.  The  Limited  Liability  Acts,  Including: 

(1)  The  Act  of  March  3,  1851,  as  Amended. 

(2)  The  Act  of  June  26,  1884. 

4.  Section  941,  Rev.  St.,  as  Amended,  Regulating  Bonding  of  Ves- 

sels. 

5.  Statutes  Regulating  Evidence  in  the  Federal  Courts. 

6.  Suits  in  Forma  Pauperis. 

7.  The  Admiralty  Rules  of  Practice. 


C655»-19 


^ugl?c5  on  5<^beral 
3urtsbictton  anb  Proccburc. 

1904.    G34  pages.    $3.75  delivered. 

By  ROBERT  M.  HUGHES,  of  the  Norfolk  Bar, 

Author  of  "Hushes  on  Admiralty,"  and  Lecturer  at  the  George 
Washington  University  Law  School. 


TABLE    OF   CONTENTS. 

Chap. 

1.  Introduction— What  it  Comprehends. 

2.  The  District  Court— Its  Criminal  Jurisdiction  and  Practice. 

3.  Same — Continued. 

4.  The    District    Court— Criminal     Jurisdiction— Miscellaneous 

Jurisdiction. 

5.  The  District  Court — Bankruptcy. 
G-8.  Same — Continued. 

9.  The  District  Court — Miscellaneous  Jurisdiction. 

10.  The  Circuit  Court— Original  Jurisdiction. 

11-12.  Same — Continued. 

13.  The  Circuit  Court— Jurisdiction  by  Removal. 

14-15.  Same — Continued. 

16  The  Circuit  Court— Jurisdiction  by  Removal — Original  Juris- 
diction of  the  Supremo  Court— Other  Minor  Courts  of  Orig- 
inal Jurisdiction. 

17.  Procwlure  in  the  Ordinary  Federal  Courts  of  Original  Juris- 

diction-Courts of  Law. 

18.  Procedure  in  the  Ordinary  Federal  Courts  of  Original  Juris- 

diction—Courts of  Equity. 

19.  Same — Continued. 

20.  Appellate  Jurisdiction— ^he  Circuit  Court  of  Appeals. 

21.  Appellate  Jurisdiction— The  Supreme  Court. 

22.  Procedure  on  Error  and  Appeal. 

The  U.  S.  Supreme  Court  Rules  and  the  Rules  of  Practice  for  the 
Courts  of  Equity  of  the  United  States  are  given  in  an  appendix. 


C6559-20 


3ngersoU  on  Public 
Corporations. 

1904.    738  pages.    $3.75  delivered. 

By  HENRY  H.  INGERSOLL,  LL.  D., 

Dean  of  the  University  of  Tennessee  School  of  Law. 


TABLE    OF    CONTENTS. 

Part  1.— QUASI  CORPORATIONS. 

Chap. 

1.  Nature,  Creation,  Classification. 

2.  Quasi  Corporations— Liabilities,  Elements,  Counties,  Property, 

etc. 

3.  Same — Continued. 

4.  Same — Continued. 

Part  2.— MUNICIPAL  CORPORATIONS. 

5.  Municipal   Corporations.  .  .    ^.tu  4.  t>^ 

6.  Their  Creation— How— By  What  Bodies— Subject  to  What  Re- 

strictions, etc. 

7.  Their  Alteration  and  Dissolution. 

8.  The  Charter. 

9.  Legislative  Control. 

10.  Proceedings  and  Ordinances. 

11.  Officers,  Agents,  and  Employes. 

12.  Contracts. 

13.  Improvements. 

14   Police  Powers  and  Regulations. 

15.  Streets,  Sewers,  Parks,  and  Public  Buildings. 

16.  Torts.  ..... 

17.  Debts,  Funds,  Expenses,  and  Admmistration. 

18.  Taxation. 

19.  Actions. 

Part  3.— QUASI  PUBLIC  CORPORATIONS. 

20.  Quasi  Public  Corporations. 

21.  Railroads. 

22.  Electric  Companies. 

23.  Water  and  Gas  Companies. 

24.  Other  Quasi  Public  Corporations. 


C6559-21 


3aggarb  on  Corts. 

1895.    2  vols.    1307  pages.    $7.50  delivered. 

By  EDWIN  A.  JAGGARD,  A.  M.,  LL.  B., 
Professor  of  the  Law  of  Torts  in  Minnesota  University  Law  School. 


TABLE    OF    CONTENTS. 

Part  1.— IN  GENERAL. 

Chap. 

1.  General  Nature  of  Torts. 

2.  Variations  in  the  Norni:i]  Right  to  Sue. 

3.  Liabilltj'  for  Torts  Coniraittcd  by  or  wltli  Others. 

4.  Discharge  and  Limitation  of  Liability  for  Torts. 

5.  Remedies. 

Part  2.— SPECIFIC  WRONGS. 

6.  Wrongs  Affecting  Safety  and  Freedom  of  Persons. 

7.  Injuries  in  Family  Relations. 

8.  Wrongs  Affecting  Reputation. 

9.  Malicious  Wrongs. 

10.  Wrongs  to  Possession  and  Property. 

11.  Nuisance. 

12.  Negligence. 

13.  Master  and  Servant. 

14.  Common  Carriers. 

C6559-22 


IHclCcbei)  on  (fribence. 

1907.     540  pages.     $3.75  delivered. 

By  JOHN  JAY  McKELVEY,  A.  M.,  LL.  B., 

Author  of  "Common-Law  Pleading,"  etc. 

Second  Edition. 


TABLE   OF   CONTENTS. 
Cbap. 

1.  Introductory. 

2.  Judicial  Notice. 

3.  Questions  of  Law  and  Questions  of  Fact. 

4.  Burden  of  Proof. 

5.  Presumptions. 

6.  Admissions. 

7.  Confessions. 

8.  Matters  Excluded  as  Unimportant,  or  as  Misleading,  though 

Logically  Relevant. 

9.  Character. 

10.  Opinion  Evidence. 

11.  Hearsay. 

12.  Witnesses. 

13.  Examination  of  Witnesses. 

14.  Writings. 

1.").  Demurrers  to  Evidence. 

€6559-23 


Horton  on  Bills  anb  Vcoks. 

1900.    600  pages.    $3.75  delivered. 

By  PROF.  CHARLES  P.  NORTON. 
Third  Edition:    By  Francis  B.  Tiffany. 


TABLE    OF    CONTENTS. 
Chap. 

1.  Of  Negotiability  so  far  as  it  Relates  to  Bills  and  Notes. 

2.  Of  NopotiaMo  Hills  and  Notes,  and  their  Formal  and  Essen- 

tial  Hoquisltes. 

3.  Acceptance  of  Bills  of  E.xchange. 

4.  Indorsement. 

5.  Of  the  Nature  of  the  Liabilities  of  the  Parties. 

6.  Transfer. 

7.  Defenses  as  against  Purchaser  for  Value  without  Notice. 

8.  The  Purchaser  for  Value  without  Notice. 

9.  Of  Presentment  and  Notice  of  Dishonor. 
10.  Checlss. 

Appendix. 


06559-24 


5f?tpman  on  Commonlatp 
Pleabtng. 

1895.     615  pages.  $3.75  delivered. 

By  BENJAMIN  J.  SHIPMAN,  LL.  B. 
Second  Edition. 


TABLE    OF   CONTENTS. 

Chap. 

1.  Forms  of  Action. 

2.  Forms  of  Action. 

3.  Tlie  Parties  to  Actions. 

4.  Tlie  Proceedings  in  an  Action. 

5.  The  Declaration. 

G.  The  Production  of  the  Issue. 

7.  Material tj'  in  Pleading. 

8.  Singleness  or  Unity  in  Pleading. 

9.  Certainty  in  Pleading. 

10.  Consistency  and  Simplicity  in  Pleading. 

11.  Directness  and  Brevity  in  Pleading. 

12.  Miscellaneous  Rules. 
Appendix. 


C6559-25 


3t?tpman  on  (f  quity 
Plcabtn^. 

1897.     044  pages.     $3.75  delivered. 

By  BENJ.  J.  SHIPMAN,  LL.  B., 
Author  of  "Shipman's  CoiuuioD-Law   Pleading." 


TABLE    OF    CONTENTS. 
Chap. 

1.  Equity  Pleading  in  General. 

2.  Parties. 

3.  Proceedings  in  an  Equitable  Suit 

4.  BilLs  in  Equity. 

5.  The  Disclaimer. 
G.  Demurrer. 

7.  The  Plea. 

8.  The  Answer. 

9.  The  ReplicaUon. 


C6559-20 


Smttf?'s  (Elementary  taw. 

1896.     367  pages.     $3.75  delivered. 

BY  WALTER  DENTON  SMITH, 

Instructor  in  the  Law  Department  of  the  University  of  Michigan. 


TABLE    OF    CONTENTS. 
Chap. 

Part  1.— ELEMENTARY  JURISPRUDENCE. 

1.  Nature  of  Law  and  the  Various  Systems. 

2.  Government  and  its  Functions. 

3.  Government  in  the  United  States. 

4.  The  Unwritten  Law. 

5.  Equity. 

G.  The  Written  Law. 

7.  The  Authorities  and  their  Interpretation. 

8.  Persons  and  Personal  Rights. 

9.  Proi>erty. 

10.  Classification  of  the  Law. 

Part  2.— THE  SUBSTANTIVE  LAW. 

11.  Constitutional  and  Administrative  Law. 

12.  Criminal   Law. 

13.  The  Law  of  Domestic  Relations. 

14.  Corporeal  and  Incorporeal  Hereditaments. 

15.  Estates  in  Real  Property. 

16.  Title  to  Real  Property. 

17.  Personal  Property. 

18.  Succession  After  Death. 

19.  Contracts. 

20.  Special  Contracts. 

21.  Agency. 

22.  Commercial  Associations. 

23.  Torts. 

Part  3.— THE  ADJECTIVE  LAW. 

24.  Remedies. 

25.  Courts  and  their  Jurisdiction. 

26.  Procedure. 

27.  Trials. 


CG559-27 


tiffany  on  Ctgciicij. 

1903.    609  pages.    $3.75  delivered. 

By  FRANCIS  B.  TIFFANY, 
Author  of  "Death  by  Wrongful  Act,"  "Liiw  of  Sales,"  etc. 


TABLE    OF    CONTENTS. 

Chap. 

Part  ].— IN  GENERAL. 

1.  Introductory — Definitions. 

2.  Creation  of  tlie  Relation  of  Principal  and  Agent — Appointment. 

3.  Same  (continued) — Katification. 

4.  What  Acts  Can   lie   Done  by  Agent — Illegality — Capacitj'  of 

Parties — Joint  Principals  and  Agents. 
r».  Dolf'j,'ation  by  Ag(Mit — Snl)agents. 
(j.  Termination  of  the  Relation. 

7.  Construction  of  Authority. 

Part  2.— RIGHTS  AND  LIAP.ILITIRS  PETWEEN  PRINCIPAL 
AND   THIRD    PERSON. 

8.  Liability  of  Principal  to  Third  Person — Contract. 

9.  Same  (continued). 

10.  Admissions  i)y  Agent — Notice  to  Agent. 

11.  Lial)ility  of  Principal  to  Third  Per.son — Torts  and  Crimes. 

12.  Liability  of  Third  I'erson  to  Principal. 

Part  .3.— RIGHTS  AND  LIAPILITIES  BETWEEN  AGENT  AND 
THIRD    PERSON. 

13.  Liability  of  Agent  to  Third  Person  (including  parties  to  con- 

tracts). 

14.  Liability  of  Third  Person  to  Agent. 

Part  4.— RIGHTS  AND  LIABILITIES  BETWEEN  PRINCIPAL 
AND  AGENT. 

15.  Duties  of  Agent  t©  Principal. 
IG.  Duties  of  Principal  to  Agent. 

Appendix. 


C655S>-28 


(Tiffany  on  Persons  anb 
X)omesttc  delations. 

1909.    Go6  pages.    $3.75  delivered. 
By  WALTER  C.  TIFFANY. 
Second  Edition :  Edited  by  Roger  W.  Cooley. 


Chap. 


TABLE    OF    CONTENTS. 


rart  1.— HUSBAND  AND  WIFE. 


1.  Marriage. 

2.  Persons  of  the  Spouses  as  Affected  by  Coverture. 

3.  Kiglils  in  Property  as  affected  by  Coverture. 

4.  Contracts,  Conveyances,  etc.,  and  Quasi-Contractual  Obliga- 
'         tions. 

5.  Wife's  Equitable  and  Statutory  Separate  Estate. 

6.  Antenuptial  and  Postnuptial  Settlements. 

7.  Separation  and  Divorce. 

Part  2.— PARENT  AND  CHILD. 

8.  Legitimacy,  Illegitimacy,  and  Adoption. 

9.  Duties  and  Liabilities  of  Parents. 

10.  Rights  of  Parents  and  of  Children. 

Part  3.— GUARDIAN  AND  WARD. 

11.  Guardians  Defined — Selection  and  Appointment. 
1**    Rights,  Duties,  and  Liabilities  of  Guardians. 

13.  Termination  of  Guardianship— Enforcing  Guardian's  Liability. 

Part   4— INFANTS,   PERSONS    NON    COMPOTES    MENTIS, 
AND   ALIENS. 

14.  Infants. 

15.  Persons  Non  Compotes  Mentis  and  Aliens. 

Part   5.— MASTER  A^'D    SERVANT. 

16.  Creation  and  Termination  of  Relation. 


C0559a-29 


Ciffany  on  Sales. 

1908.     534  pages.     $3.75  delivered. 
By  FRANCIS  B.  TIFFANY,  A.  B.,  LL.  B. 

Author  of  "Tiffany  on  Death  by  Wrongful  Act." 
Second  Edition. 


TABLE    OF    CONTENTS. 
Chap. 

1.  Formation  of  the  Contract. 

2.  Formation  of  the  Contract— Under  the  Statute  of  Frauds. 

3.  Effect  of  the  Contract  in  Fassing  the  Property— Sale  of  Spe- 

citic  Goods. 

4.  Effect  of  the  Contract  in  Passing  the  Property— Sale  of  Goods 

not  Specific. 

5.  Fraud,  and  Retention  of  Possession. 
6    Illegality. 

7.  Conditions  and  Warranties. 

8.  Performance. 

9.  Rights  of  Unpaid  Seller  against  the  Goods. 
10.  Action  for  Breach  of  the  Contract. 

Appendix:     Sales  Act— English  Sale  of  Goods  Act. 


C6559a-30 


Vance  on  insurance. 

1S96.    GS3  pages.    $3.75  delivered. 

By  WILLIAM  REYNOLDS  VANCE, 

Professor  of  Law  in  the  George  Washington  University, 


The  principal  object  of  this  treatise  is  to  give  a  consistent  state- 
ment of  logically  developed  principles  that  underlie  all  contracts  of 
insurance,  with  subsidiary  chapters  treating  of  the  rules  peculiar 
to  the  several  different  kinds  of  insurance.  Special  attention  has 
been  given  to  the  construction  of  the  standard  fire  policj'. 

This  treatment  will  help  to  bring  about,  we  believe,  the  much 
desired  clarification  of  this  branch  of  the  law. 

The  chapters  cover. — 
Historical  and  Introductory. 
Nature  and  Requisites  of  Contract. 
Parties. 

Insurable  Interest. 
:\[aking  the  Contract. 
The  Consideration. 

Consent  of  the  Parties — Concealment 
Consent  of  the  Parties — Warranties. 
Agents  and  their  Powers. 
Waiver  and  Estoppel. 
The  Standard  Fire  Policy. 
Terms  of  the  Life  Policy. 
Marine  Insurance. 
Accident  Insurance. 

Guaranty,  Credit,  and  Liability  Insurance. 
Appendix. 


C6559-31 


IPilson  on 
3nternational  £air. 

1910.     023  pages.     $3.7.5  delivered. 
By  GEORGE  GRAFTON  WILSON. 


TABLE    OF    CONTENTS. 

Chap. 

1.  Persons  in  International  Law. 

2.  K.xistence.  Independence  and  Equality. 

3.  Property  and  Domain. 

4.  .Jurisdiction. 

.").  Diplomatic  Relations. 

C.  Con.sular  and  Other  Relations. 

7.  Treaties  and  Other  International  Agrooiuents. 

8.  Amicable  Means  of  Settlement  of  International  Differences. 
r>.  Non-Amicable  IMoasures  of  Redress  Sliort  of  War. 

10.  Nature  and  Commencement. 

11.  Area  and  General  Effect  of  Belligerent  Operations. 

12.  Rights  and  Obligations  During  War. 

13.  Persons  During  War. 
11.  Proi)erty  on  Land. 
1.").  Property  on  Water. 
!(■>.  Maritime  Capture. 
17.  Rules  of  War. 

IS.  Military  Occupation  and  Government. 

19.  Prisoners.  Disabled  and  Shipwrecked. 

20.  Non-Hostile  Relations  between  Belligerents. 

21.  Termination  of  War. 

22.  Nature  of  Xeutrality. 

23.  Visit  and  Search. 

24.  Contraband. 
2.0.  Blockade. 

2().  Continuous  Voyage. 

27.  Unneutral  Service. 

28.  Prize. 


Ct;.V)9-32 


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